Illustration: Liu Rui/GT
The South China Morning Post (SCMP) published an article on Monday under the headline “How BYD and Chinese peers are transforming Europe’s small EV market.” The market is witnessing increasingly fierce competition, yet at the same time, it’s ripe with opportunities for collaboration.
Matthias Schmidt, an independent European automotive analyst, was cited stating that the smaller electric vehicle (EV) segment was set to grow further, and the adoption of cheaper lithium-iron-phosphate (LFP) battery chemistry, which is already popular in China, would help carmakers cut prices.
The European auto industry is rapidly transitioning toward electrification. On the one hand, European carmakers are facing stricter emissions targets; on the other hand, there is a growing acceptance of EVs among European consumers. These factors present opportunities for the growth of the EV industry. A key issue for Europe is how to seize this opportunity to further expand the EV market.
Expanding the European EV market could benefit European automakers and foster the growth of the auto industry. The key to unlocking this potential lies in tackling the issues that concern consumers. According to a McKinsey report published in August 2024, while almost 80 percent of European car buyers in the survey expect to get an EV in the future, 22 percent remain skeptical about these vehicles. The survey suggests that the main factors preventing skeptics from considering EVs involve high purchase prices, the inability to charge at home, and concerns about real battery driving range.
Increasing collaboration with China’s EV industry, whether through trade, investment, or other means, is proving to be a viable strategy for addressing the concerns of European car buyers. At the very least, this suggests potential benefits, considering the remarkable performance of Chinese automakers in reducing costs and advancing EV technology, including battery innovation.
Taking the example of LFP battery mentioned by Schmidt, a report published on the website of the International Energy Agency notes that Chinese producers have prioritized LFP, a cheaper battery chemistry. Initially thought to be unsuitable for EVs due to their lower energy density, years of research and development by Chinese producers have honed LFP batteries, which are now about 30 percent less expensive than their main competitor, lithium nickel cobalt manganese oxide batteries.
This example underscores the potential for collaboration between China and Europe in the EV sector. By strengthening cooperation and adopting a more positive perspective on both collaboration and competition, this could greatly enlarge the European EV market and drive the European auto industry forward.
Cooperation between China and Europe in the auto industry has a deep foundation built over several decades. This mutually beneficial partnership has established a considerable scale of cooperation and a solid foundation, allowing both sides to share market opportunities and resulting in numerous successful cases.
In recent years, Chinese and European auto companies have engaged in deep collaboration in the EV sector. For example, the partnership between Xpeng Motors and Volkswagen has accelerated the development of EVs through complementary advantages, enhancing research and development speed while optimizing cost structures.
While Chinese auto companies are ramping up their investments in Europe, European auto companies continue to expand their investments in China. For instance, CATL’s power battery factory in Germany officially began operations in 2023. Meanwhile, BMW has started the construction of its sixth-generation power battery project in Shenyang, Northeast China’s Liaoning Province. These bilateral investments not only enhance the China-Europe EV industry chain but also promote deep integration in technology and supply chains.
Some European industry professionals have been expressing concerns over rising protectionist tendencies in Europe’s EV policies, advocating for open competition and collaboration to advance the EV sector.
Only by transcending zero-sum thinking can win-win outcomes be achieved. This is beneficial for both the European auto industry and consumers. In the current situation, both China and Europe should encourage free trade and mutual investment between enterprises, improve the EV industry chain and supply chain, and work together to expand the shared interests of the EV sector.
The author is a reporter with the Global Times. [email protected]
