China’s electric carmakers make their move on Europe By Reuters
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By Nick Carey and Yilei Sun
MUNICH/BEIJING (Reuters) – China’s electric carmakers are darting into Europe, hoping to catch traditional auto giants cold and seize a slice of a market supercharged by the continent’s drive towards zero emissions.
Nio Inc (NYSE:) Inc launches the ES8 electric vehicle in Oslo. It is among a few challengers. The company, which has a valuation of $57billion, makes its first foreign foray outside China.
Aiways and BYD’s Tang are some of the other brands that plan or have begun selling cars in Europe.
Yet, China has struggled in Europe’s competitive, highly-attended car market. Their strategic mistakes were made and they also fought with the perception that China was not able to compete in quality, a long-held association with mass production.
According to Nio’s Chief Executive William Li, it will be a difficult road to achieve success in a mature market that is “very difficult” to succeed.
Chinese carmakers will likely need at least a decade to establish a foothold in Europe, according to the billionaire entrepreneur. This prediction was also made by He Xiaopeng who is CEO of electric vehicle maker Xpeng (NYSE.) and told Reuters that his company requires 10 years to create a “good foundation” in Europe.
The new players believe that they are the best bet to crack this lucrative market, as many have never made electric cars before.
Electric car sales in Europe more than doubled in 2013 and increased 130% over the first six months of 2014. However, the European Union’s traditional automakers are slowly shifting to electric their vast vehicle portfolios and they have not yet flooded the market.
Alexander Klose heads Aiways’ foreign operations. He said that the market was not as crowded yet as it is for combustion-engine vehicles.
He said, “That’s where we believe we have an opportunity.” He took a U5 SUV around Munich. It is a crossover SUV that is available in France, Belgium, and Germany.
To reduce costs, the U5 comes in four colours with two trims and starts at 30,000 euro ($35,000 in Germany). It is below average for new vehicles and most local EV price.
‘GERMAN PEOPLE BUY GERMAN CARS’
As Chinese carmakers gear up to enter Europe, they are trying out different business models, from relying on importers, low-cost retail options or building up more traditional dealerships.
It is likely that the new reality of top Western carmakers such as BMW (NASDAQ:) Inc producing cars in China, has reaffirmed past notions about low-quality workmanship.
Antje Levers is a teacher living in west Germany, near the Dutch border. Her husband had a diesel Chevrolet Orlando, but she wanted something greener. After much research, they purchased an Aiways U5 last summer. They love its low running cost and handling.
People had said to her that Chinese cars are not affordable and would destroy German jobs. She believes that this is not true today in an international car industry, where parts from German cars can be found in Chinese ones.
According to the 47-yearold, “Germans buy German cars. To buy a Chinese automobile you must have some courage.” Sometimes you have to open your mind for different things.
NIO LANDS IN NORWAY WITH NOMI
Nio launches its ES8 electric SUV alongside a NIO House – part-showroom, part-cafe and workspace for customers in the capital of Norway, a country that’s also the initial base for Xpeng.
Norway has long been a leader in electric vehicle technology, thanks to state support. The European entry point is logical because the customers who are familiar with electric vehicles can sell them on any Chinese brand. Christina Bu, secretary general, of the Norwegian EV Association, stated that it’s a good idea.
Bu said that it is possible to not sell one if you travel to another European country. She also stated that the Norwegian EV Association has spoken extensively to a variety of Chinese EV manufacturers to gain market knowledge and culture.
She is uncertain, though, how consumers will react to Nio’s approach of swapping out batteries for customers rather than stopping to charge them, or the carmaker’s strategy of leasing https://www.reuters.com/article/us-nio-battery-electric-idUSKCN25G0OE rather than selling batteries to customers.
She said that the Chinese technology is where they are truly at the forefront. This was referring to Nomi (the digital assistant found in Nio’s vehicles).
NEWCOMERS’ STRATEGIES DIVERGE
One size does not fit all. Nio and Xpeng were building their Norwegian organizations, while SAIC’s MG uses a car importer for a few European markets.
Aiways has a lower cost approach to selling cars across Europe. However, Klose states that it differs by country.
The company’s German sales channel is Euronics. It is an association independent electronics retailers that sells the cars rather than creating traditional dealerships.
Klose, an ex-executive at Volvo and Ford, stated that the company aims to be selling across Europe by the next year, and then to move into the U.S. market in 2023.
As consumers are used electronics from China, past attempts by Chinese carmakers have failed to make an impact on Chinese EV manufacturers.
Brilliance, a 2007 vehicle that received just one star in a German crash test for cars, was one of these failures. This damaged the brand.
Klose explained that Chinese manufacturers are increasingly entering the market and will aid us in making Chinese brands more acceptable to consumers.
Arnie Richters (chair of Platform for Electromobility, a Brussels-based industrial group) said that selling cars to Europeans can be a difficult business especially if the product you are trying to sell is not well-known.
But if they can bring lots of innovation, they will have plenty of potential.”
($1 = 0.8537 euros)
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