Transplant Factories, Joint Ventures Will Blunt China's Electric Car Impact

Europe's manufacturers are braced for a Chinese electric car sales onslaught but the impact will be mitigated by their establishment of European factories and willingness to set up local joint ventures. Threats of tariffs won't stall China's threat to European electric carmakers, but the plans might stumble as the promised exponential gains in electric car sales meet the consumer reality of high prices, inadequate performance, patchy power availability and a skimpy charging infrastructure. Donald Sadoway, Professor of Materials Chemistry at the Massachusetts Institute of Technology, said demand by consumers for electric cars globally is likely to plateau because the inherent disadvantages of electric cars compared with internal combustion engine powered ones look set to last. JATO Dynamics, in a report called "Perception: The last barrier for Chinese cars", said demand in the China home market is flagging, and overseas markets, particularly rich ones like Europe, appear like low-hanging fruit to the likes of BYD, SAIC's MG, Geely and its Polestar and Lynk & Co subsidiaries, Chery, Great Wall and Dongfeng, among others. "In the coming years we expect to see further collaboration between Western legacy carmakers and Chinese through joint ventures in areas like technology and charging infrastructure. We may also see more Chinese following the example set by SAIC in acquiring Western carmakers." Munoz said in an interview by 2030 Chinese manufacturers, including MG, could get around 6 to 8% of all European new car sales. "I would not talk about an invasion, as the current data shows Chinese car brands, MG included, Polestar/Volvo excluded, made up just 2.3% of through August, and 60% of the volume corresponded to MG, not positioned/recognized as a Chinese brand by the consumers. There are definitely interesting cars that would change the game, MGs, some BYDs, Geelys, Cherys, but they first need to address the negative perception strongly related to the pandemic, years of copycats from the Chinese industry to Western cars, low quality issues in the past, and the rising economic/political tensions with China," Munoz said.