Chinese electric cars face “catastrophe” in Europe

Nikkei Asia reported that SVOLT, China's leading electric vehicle battery maker, officially announced last week that it will shut down its operations in Europe from January 2025. This is a subsidiary of Great Wall Motor, a leading Chinese automobile group.

Difficult situation for Chinese electric cars

The decision comes as Chinese electric carmakers face a number of safeguards on the continent. SVOLT has abandoned plans to open a factory this year in Germany, while construction of two others has been delayed and faces legal challenges.

BYD electric cars at the exhibition in Germany in 2023

Specifically, in 2020, the company announced an investment of more than 2 billion USD to build 2 electric vehicle battery factories in Saarland state (Germany) and create up to 2,000 jobs. SVOLT also signed an agreement with Stellantis (the 5th largest automobile group in the world, owning many major American and European automobile brands) to supply electric vehicle batteries from 2025. However, a lawsuit occurred, causing 1 of the 2 factories to stop, and the remaining factory is still unable to operate. In addition, SVOLT also had to abandon plans to build a factory in Brandenburg state in eastern Germany.

SVOLT is not the first Chinese electric car company to scale back its operations in Europe. In August, Great Wall Motor closed its Munich headquarters and laid off all 100 employees after disappointing sales. And in December 2023, another leading Chinese electric car battery maker, Contemporary Amperex Technology (CATL), abandoned plans to build a factory in eastern Germany that would have been CATL’s first outside China.

Chinese electric carmakers are scaling back operations in Europe as sales of their electric vehicles decline in the continent. BYD, China’s top electric carmaker, sold just 218 vehicles in Germany in August, accounting for less than 1% of the market.

Difficulty gets harder

On October 24, Bloomberg reported that China is pressuring its automakers to halt expansion in the EU market due to the escalating trade conflict between the two sides. Accordingly, Beijing asked Chinese electric vehicle manufacturers to halt the development of production facilities or signing new agreements. Following the warning, Dongfeng Automobile Group, a state-owned Chinese automaker, has suspended its plans to produce cars in Italy.

In early October, the EU voted to raise tariffs on electric cars made in China to 45%, citing unfair subsidies to its carmakers. China, of course, has denied the EU’s accusations and has threatened to raise import duties on European dairy products, spirits, pork, and cars.

China and the EU recently announced plans to negotiate further on electric vehicle tariffs to resolve their differences, but the trade dispute between the two sides is unlikely to be resolved soon.

Meanwhile, the reduction in operations, especially production, by Chinese electric vehicle manufacturers in Europe may also come from concerns about excess capacity. According to Chinese media, the country's new energy vehicle production capacity (mostly electric vehicles) in 2025 is expected to reach more than 36 million units, but the expected sales in the same year will only reach about 17 million units, meaning an excess capacity of nearly 20 million units.

Global electric vehicle sales soar

Reuters cited a recent report by market research firm Rho Motion (UK) saying that global sales of pure electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) in September reached 1.69 million units, up 30.5% over the same period in 2023.

Of which, sales in China reached 1.12 million vehicles (up 47.9%), while in the US and Canada reached 150,000 vehicles (up 4.3%). Meanwhile, the European market reached sales of 300,000 vehicles (up 4.2%) and in this region, the UK had the highest increase of 24%.

However, as European countries phase out incentives for electric vehicles, the forecast for EV growth in the region is being dampened. Rho Motion expects EV sales in Europe to reach 3.78 million in 2025 and 9.78 million in 2030, down 24% and 19% respectively from its previous forecast.

Source: https://thanhnien.vn/xe-dien-trung-quoc-gap-dai-nan-o-chau-au-185241026225100535.htm