Credit: Visual China

BEIJING，September 29 (TMTPost) — In 2023, Chinese car companies began to enter the overseas market en masse.

A marketing executive of an independent Chinese brand who recently returned to China from IAA Mobility 2023 told the TMTPost App that her biggest feeling from the show this time was that "Chinese cars are ready to go global".

In terms of quantity, China has become the world's largest exporter of automobiles. According to data from the China Association of Automobile Manufacturers (CAAM), China's total vehicle exports in the first half of this year increased by 76.9% year-on-year to 2.341 million units, which surpassed Japan’s first-half exports of 2.02 million units, according to the official data. This marks the first time for China to overtake Japan in terms of semi-annual automobile exports to become the world's largest auto exporter. 

However, this does not mean that Chinese car companies have the same brand awareness in overseas markets as foreign brands do in the Chinese market.

The executive told the TMTPost App that currently China's car exports are still in the transition from being quantity-oriented to being quality-oriented. “It is still in the initial stage, but with promising prospects,” she added.

However, EU Commission President Ursula von der Leyen stated during the fourth "State of the Union" address that the European Commission will initiate an anti-subsidy investigation into electric cars imported from China.  She said that the low prices of Chinese electric cars is distorting the EU market.

The general interpretation of her remarks by the media as a guesture to protect European car brands as Chinese electric cars are posing a threat to local car brands.

This also indirectly demonstrates foreign brands that used to ignore Chinese fuel cars  begin to value Chinese brands and see them as competitors.

Yiran, an electric vehicle industry consultant,  believes that the impact of the EU investigation on Chinese car exports will be much lower than the US's sanctions on China's technology industry.

However, Chinese EV makers have just begun to face challenges during their overseas journey.

Chinese EV makers "do not sell futures"

If the Shanghai Auto Show in April this year made European automotive giants marvel at Chinese domestic cars, then at the recent IAA Mobility 2023 in Munich, Chinese domestic cars began to make inroads into the European market.

Although the show in Munich inherited the name of the Frankfurt Auto Show, which is known as one of the world's top five auto shows, its influence on international car companies in recent years has declined significantly. In this year's Munich Auto Show, representatives of traditional American car manufacturers such as General Motors, as well as Japanese car manufacturers such as Toyota, Honda, and Nissan, and Korean car manufacturers such as Hyundai and Kia, were all absent from the show.

This has led to the main focus of this year's Show being on Chinese brands and German brands. According to statistics, the participants include nearly 50 Chinese companies, double the number of the previous shows. There were not only Chinese vehicle brands such as BYD, Avitr, Leapmotor, and MG, but also Chinese automotive supply chain brands such as CATL, Horizon Robotics, and SenseTime.

Of course, representatives of local German car manufacturers such as Volkswagen, Mercedes-Benz, BMW, Audi, and Porsche also participated in this year's Munich Auto Show.

One noticeable change at the show is that the center of the German brand's booth is all about electric cars, indicating their determination to embrace electrification. Chinese brands are trying to attract the attention of European consumers with their mass-produced products and technologies.

TMTPost App noticed that although German brands have made electric cars the highlight of this year's show, most of the models they released are concept cars. For example, the next-generation electric car of Mercedes-Benz, the Mercedes-Benz CLA, will be produced in 2024. Volkswagen showcased a pure electric car called the ID. GTI Concept, planned for production in 2027. And Audi’s Q6 e-tron pure electric mid-size SUV, will be available as early as 2024.

Chinese brands, on the contrary, brought products to the Munich Motor Show that are already in mass production. Among them, BYD has the largest exhibition area  in the entire venue, and the press conference site was also crowded. BYD exhibited a total of six models planned for launch in Europe, including D9 and the DM-i, with two versions priced at 50,990 euros (about $54,000) and 44,900 euros (about $47,000) respectively were launched on-site.

Leapmotor and Avatr mainly showcase their brands and technologies on the Munich Auto Show. Leapmotor debuted its first global model C10 at the event and showcased its LEAP 3.0 technology. Avatr also globally debuted its second electric vehicle since its establishment, the Avatr 12.

Zhou Ying, General Manager of Leapmotor's Marketing Department, told TMTPost App, "Leapmotor not only showed products this time, but also showed technology. We will serve European customers in the future as both a vehicle manufacturer and a technology supplier."

BYD's goal for this exhibition is to sell cars to European consumers. Li Yunfei, General Manager of BYD's Brand and Public Relations Department, told TMTPost App, "With the main sales models in Europe increasing from one to three, BYD plans to double the number of dealers in Europe to 200 by the end of this year, with the goal of achieving overseas sales of 250,000 vehicles by the end of 2023"

Chinese Electric Vehicles March to Europe

The main factor contributing to the grand appearance of Chinese brands at the Munich Auto Show  is Chinese cars’ export to Europe, the world's automotive industry center, especially new energy vehicles becomes the main force in exporting to Europe.

The data from the CAAM shows that in the first eight months of this year, China exported 2.941 million vehicles, a year-on-year increase of 61.9%. Among them, the export of new energy vehicles reached 727,000 vehicles, a year-on-year increase of 113.9%, becoming the main driver of the growth in vehicle exports.

According to data compiled by TMTPost App based on publicly available information, the top ten vehicle exporters accounted for 87.22% of the total exports from January to August. This indicates that China's vehicle exports are mainly concentrated in a few leading companies. It is notable that although BYD ranks last in terms of export share, it is the fastest-growing exporter, with 125,000 vehicles in the first eight months, a staggering 6.5-fold increase compared to the same period last year.

All the models exported by BYD to overseas markets are new energy vehicles. The impressive results of domestic car brands in overseas markets is mainly due to the dominance of new energy vehicles in the export. Moreover, it can be seen that the European market is becoming the main destination for Chinese-made new energy vehicle exports.

The data shows that new energy vehicle exports accounted for 32.1% of China's total vehicle exports in the first half of the year, but the export value accounted for 42.5% of the total. This contrast indicates that the export of new energy vehicles has brought substantial profit returns and high added value to domestic car manufacturers.

According to data from CAAM, two of the top three countries for China's new energy vehicle exports in the first half of the year, namely, Belgium and the UKare European countries. The proportion of China's vehicle exports to Europe increased from 5.7% in 2018 to 39.1%. This indicates that the export of domestic vehicles to Europe is growing rapidly.

The exports of Chinese electric vehicles into Europe, the birthplace of the global automotive industry, can be seen as a sign of globalization.

In fact, many domestic car companies have a strong enthusiasm for exporting to Europe. Shi Qingke, the General Manager of Great Wall Motors International Vehicle Business Department,  explains that exporting to Europe is not only a symbol of the company's globalization, but also can use the reputation of Europe as an "automobile paradise" to ”polish” the company and in turn benefit the domestic market.

It can be seen that the electric vehicle market in Europe is becoming the first choice for domestic car companies to export. Data shows that currently over 60% of new energy vehicles worldwide are produced and sold in China. In terms of core technology and industrial chain, China's new energy vehicle patent publication accounts for 70% of the global total. In addition, over 63% of power batteries worldwide are supplied by China.

Therefore, objectively speaking from the perspective of leading market share and leading technology, Chinese car companies now have the strength to export to Europe on a large scale.

The challenges behind prosperity

Although domestic consumers are happy to see Chinese cars go global, especially entering the European market, which taught Chinese brands how to make cars, it is still necessary to see clearly that Chinese cars are currently in the early stage of entering the European market and still need to be aware of two major realities.

The first is that the sales volume of Chinese electric vehicles in the European market is actually not high. Despite the certain growth China has achieved on its export of new energy vehicles, it may not be ranked on the sales charts in various European countries.

According to data from market research firm EU-EVS, the sales volume of pure electric vehicles in 14 European countries in August was 157,000 vehicles, a year-on-year increase of 100.7%. In the list, only SAIC's MG brand, which has its root in the UK, made it into the top ten Chinese brands.

According to data from the CAAM, in the first half of this year, China exported nearly 350,000 electric vehicles to nine European countries, exceeding the total export volume of 2022. Over the past five years, the number of Chinese cars imported by the European Union has quadrupled. However, it is worth noting that a large portion of the 350,000 electric vehicles, more specifically, a total of 182,500 vehicles, came from Tesla China, with the majority going to the European market.

The second cruel reality of China's car exports to Europe is that Chinese brands are still relatively unknown in the European market. A survey conducted by the British research firm YouGov in 2022 among 1,629 German consumers showed that only 14% of them knew about BYD, 17% had heard of NIO, 10% knew about Lynk & Co, and 8% knew about XPeng.

However, when it comes to Tesla, 95% of the respondents knew about it, and 10% of them would consider buying a Tesla electric vehicle as their next car. Among consumers who are aware of Chinese brands, only 1% or fewer would consider buying a Chinese brand electric vehicle.

Therefore, compared to increasing sales, the greater challenge for Chinese brands in the European market is how to make local consumers aware of their existence, and to purchase Chinese electric vehicles, which is the most difficult part.

 In response to this, Zhou candidly told TMTPost App, "This is a long-term and difficult process." She said that it requires brand to build reputation and respect local culture.

Li also told TMTPost App that the main challenge for Chinese cars in the European market is expanding brand awareness.

In Li's view, more car models, a wider sales service network, and continued brand marketing investment are all necessary actions for Chinese brands to further grow in the European market.

If 2023 is considered the starting point for Chinese electric vehicles to enter mature automotive markets like Europe, then when will be the time for Chinese electric vehicles to thrive in these developed automotive markets in Europe?

Perhaps it will be in the near future.

(This article was first published on the TMTPost App, Author: Wang Ruihao, Editor: Zhang

Min)

本文内容来源：钛媒体英文站