Forecasting electric car sales in Europe used to be easy. The only way was up, exponential, and China would win.
Sales expansion has slowed recently as brands are running out of early adopters. The speed is expected to increase further after 2005, as EU and UK regulations impose quotas to force EV sales.
But an unforeseen complication has arisen that may derail China’s plans, at least in the short term; There is a lack of specialized vessels to ship all those new electric cars to Europe, according to Schmidt Automotive Research.
Will this be an unforeseen lifeline for European automakers, who have lately been in China for five years in the production and promotion of electric cars and enjoy a value merit of around 30%?China is gaining ground in a nascent market made up mostly of electric SUVs worth between 30,000 euros ($32,500) and 5,000 euros ($5,000). China is expected to score even higher when the mass-market for electric cars explodes next year and in 2025.
According to investment bank UBS, sales of electric batteries in Europe will reach 2. 1 million this year, 2. 5 million in 2024, 3. 6 million in 2025 and then more than double to 9. 6 million in 2030.
The first Chinese explorers who will herald the start of the real electric car revolution will appear next year. These are cars that make a mockery of the European vision of the affordable electric car. So far, those European manufacturers have been reduced to small cars like the Renault. 5, Zoe’s replacement, priced at around €25,000 ($27,000). The Renault Twingo’s replacement, the Legfinish, will cost around 20,000 euros ($21,500). Newer Chinese cars, likely starting next year with the BYD Seagull, will be especially cheap, in line with the BYD Seagull. These are practical, urban cars that cover about 90% of overall automotive needs, an average of about 30 miles per day. They will put an end to the anxiety of independence, as no one would think of taking one on a long journey.
Prices for seagulls will start at around 10,000 euros ($10,800) and even less for Wuling Bingo, according to JATO Dynamics, which says BYD will sell between 20,000 and 30,000 seagulls a year in Europe. The diversity of bingo is around 120 miles.
Felipe Munoz, a global analyst at JATO Dynamics, said Chinese brands will succeed in this core sector because Europeans can’t do it and make money. Eventually, the Chinese will set up factories in Europe.
But big Chinese sales in Europe require expensive vehicle transporters, and according to Schmidt Automotive, there aren’t enough to go around. Perhaps European manufacturers have been presented with a “get out of jail card”, or at least some breathing space to make up lost ground?
Schmidt Automotive said about 440,000 Chinese cars and SUVs were shipped to Western Europe in the first 10 months of 2023. Just over 60% were Chinese and the rest Western brands like Tesla, BMW and Renault’s Dacia.
Renault five Electric. (Photo via Richard Bord/Getty Images)
“However, it appears that current shipping capacity boundaries are limiting further growth, with roughly no more than 50,000 units able to be shipped per month from China to Western Europe. We see Chinese manufacturers unable to surpass more than 3% of the Western European car market,” Schmidt Automotive said.
In October, annual car and SUV sales across Western Europe were running at an annual rate of 13.6 million, according to GlobalData.
Schmidt Automotive said that due to the Covid emergency and industry downturn, many old maritime vehicles were demolished, but replacements have been slow to appear and cars are now piling up at ports waiting to be exported.
“Due to a lack of supply, the value of chartered vessels has absolutely skyrocketed, probably wiping out more of the production savings from production cars in lower-cost countries like China,” said Matt Schmidt of Schmidt Automotive. The transportation challenge would be solved.
Renault Twingo
At the same time, Europeans are also facing charging issues as the EV chain falters, undermining the ability to make reasonable cars to thwart Chinese imports.
Luca de Meo, CEO of Renault, and president of the European Automobile Manufacturers Association, said the EU needs to help its own automakers catch up with the Chinese.
“We want to work with policymakers to create the conditions for the production of a varied diversity of zero-emission models, adding small electric cars that are cost-effective to produce in Europe,” de Meo said in a recent speech.
Government subsidies would be reduced.
“In this way we can face many demanding situations with the same miracle solution, especially when it comes to urban mobility. We also want to improve demand through sufficiently good and tailored incentive systems, at all political levels, from the EU to urban and local authorities,” said de Meo.
Another conceivable lifeline for European industry would be the imposition of higher price lists on Chinese imports. The European Commission is currently investigating Chinese subsidies for its electric vehicles. The investigation began in October and is expected to last thirteen months. The Commission could simply impose provisional tasks on most of the existing 10% tariff after four months and this could include, in February, increased import tasks for a period of up to five years.
Investment bank UBS believes that whatever happens with the EU, major Chinese brands will most likely open European factories.
That makes sense to Schmidt Automotive, which said Volvo’s new EX30 will now also be made in Belgium. Initial plans called for it to be imported from China.
“Once those new vessels enter service, in one to two years’ time, the EU is expected to introduce higher import tasks for Chinese-made cars as part of the EU’s ongoing investigation. So once shipping capacity and prices go down, “the price brands will have to pay to bring these shiny new models to the dock of a European port will likely increase. The Chinese invasion is probably not as undeniable as many commentators have predicted,” Schmidt said.