"Chinese bridge technology causing scrutiny in Europe's automotive sector"
In the rapidly evolving world of automotive technology, European car brands are responding to the surge of Extended-Range Electric Vehicles (EREVs) in China by ramping up their investments in new energy vehicle (NEV) technologies and seeking strategic partnerships.
Adaptation through Technology and Partnerships
European brands with a presence in China, such as those under SAIC (owner of the British MG brand), are launching an array of new energy vehicles, including BEVs, EREVs, and PHEVs. MG, for instance, plans to release 13 new EV models globally in the next two years, including EREVs, supported by investments in new product and battery technology. SAIC also has joint projects with Audi and Huawei to boost EV technology development.
Competitive Pressure and Market Dynamics
Chinese brands like BYD, XPeng, and MG are making significant inroads into the European market with competitive pricing and innovative technologies. For example, BYD and others hold about 10% of Norway’s EV market, with further growth expected. This competitive pressure challenges European brands to keep pace amid tariffs and price cutting by Chinese rivals.
Tariffs and Price Wars
Although the EU has imposed tariffs on Chinese EV imports, certain markets like Norway circumvent these tariffs, allowing Chinese brands to compete strongly on price. BYD notably reduced prices by 21% on multiple models to sustain competitiveness.
Technological Challenges
European automakers must accelerate innovation in battery technologies and smart features to match Chinese advances, including autonomous driving capabilities being pursued aggressively by companies like XPeng aiming for Level 4 autonomy by 2026.
Investment and R&D
Some European brands and partnerships invest heavily in R&D to develop EREV and connected vehicle technologies, yet face the hurdle of matching the rapid pace and scale of Chinese developments, which are backed by substantial government support and expanding infrastructure.
The Chinese Market
Despite Volkswagen and Mercedes-Benz rehabilitating themselves on the European market and outperforming electric pioneer Tesla in sales, they still struggle in the Chinese market. BMW ended its EREV experiment in 2018 due to the boom in China catching the Europeans off guard. Domestic Chinese brands like BYD and Chery have been introducing EREVs for several months.
The Potential in the US Market
The potential for EREVs in the US market is high, with VW planning the EREV Scout pickup and Stellantis an EREV model of their Ram 1500 pickup. Li Auto, a Chinese car manufacturer, is a pioneer in EREVs, focusing almost exclusively on electric vehicles with range extenders since its founding in 2015.
The European Market
Currently, only two EREV models are available for the European market: the C10 REEV SUV from Leapmotor and the Mazda MX-30 R-EV. However, the majority of the range in these vehicles comes from the gasoline generator, which is the downside of the bridging technology. If the vehicle is driven predominantly with an empty battery and the generator is running, the internal combustion engine works almost like in a normal gasoline SUV.
In 2024, EREV sales in China experienced a real boom, with more than one million vehicles sold, an increase of 79% compared to the previous year. Despite these developments, European car brands face significant challenges in adapting to the fast-changing market, including strong Chinese competition, tariffs, price wars, and the need to rapidly scale new technologies to stay relevant.
- European automakers, such as those under SAIC, are investing in new energy vehicle technologies and forming strategic partnerships with companies like Audi and Huawei, in order to respond to the rise of Extended-Range Electric Vehicles (EREVs) in China.
- Chinese brands, like BYD, XPeng, and MG, are making significant advancements in the European market through innovative technologies and competitive pricing, causing European brands to face challenges in keeping pace.
- Despite tariffs imposed by the EU on Chinese EV imports, certain markets like Norway allow Chinese brands to compete strongly on price, as seen with BYD's price reduction by 21% on multiple models.
- European automakers need to accelerate their innovation in battery technologies, smart features, and autonomous driving capabilities to match the rapid advancements being made by Chinese companies like XPeng, in order to remain competitive in the global market.
