"In the past, German cars were exported to China, but now the situation has begun to change. Chinese cars have gradually been exported to Germany." Talking about the new changes in the import and export of China's auto industry, Duan Wei, Director-General of the German Chinese Chamber of Commerce, felt deeply.
Not long ago, Duan Wei participated in the new car launch conference of some Chinese electric car companies in Germany. He found that German consumers are eager to try Chinese electric vehicle products, and have tried smart assembly of electric vehicles. "They are more interested in larger operating screens, surround sound and other devices in electric vehicles." He said in an interview with a reporter from China Business News, "Compared with China and the United States, Germany's digitalization is relatively slow. For German consumers In other words, these intelligent assemblies are both strange and novel.”
And this has become an opportunity for my country's auto industry to open up overseas markets. In recent months, my country's auto exports have continued to grow. According to the latest data from the General Administration of Customs, my country will export 352,000 vehicles in October 2022, a year-on-year increase of 60.0%. From January to October, my country exported 2.615 million vehicles, a year-on-year increase of 52.8%.
Dai Jiahui, co-head of the Greater China region of Arrival Platinum Consulting and head of the auto industry in the Asia-Pacific region, said in an interview with a reporter from China Business News that the main reason for the increase in China's auto exports is that China has exported more and more attractive and valuable products. Cost-effective electric vehicles. "China's domestic EV market is the largest in the world, and models that can succeed in this highly competitive market are likely to win customers elsewhere," he said.
Technical advantages and scale advantages
Cui Dongshu, secretary-general of the Passenger Federation, also believed in an interview with a reporter from China Business News that the increase in the number of my country's electric vehicles exported to developed countries and regions such as Europe is the main reason for the continuous growth of my country's automobile exports.
According to customs statistics, in the first 10 months of this year, my country's electric passenger vehicles increased by 116.2%. According to statistics from the China Association of Automobile Manufacturers, nearly 10 Chinese car companies have exported new energy vehicles to Europe, and Chinese electric vehicles have accounted for 10% of the total sales of electric vehicles in Europe.
In Cui Dongshu's view, one of the reasons why my country's electric vehicle exports to Europe and other developed countries and regions is increasing is that my country's electric vehicle companies have strong technical advantages. "On the one hand, my country has a relatively deep accumulation in the field of batteries, which will help my country's electric vehicle companies take the first-mover advantage and continue to upgrade and iterate technology. There is also a deep accumulation in the field, and this experience can be transferred to electric vehicles." He said.
Duan Wei found at the aforementioned press conference that Chinese companies have integrated technological elements such as voice control and AI systems into electric vehicles. Not only that, digital technology has penetrated into all aspects. "Consumers can even play games in the car, and a car has become an entertainment space and audio-visual space." He told the first financial reporter.
In Dai Jiahui's view, another major advantage of Chinese auto companies lies in their scale. On the one hand, the reason behind this comes from the completeness of China's auto industry chain, and on the other hand, the resilience of the entire supply chain. "China's established and resilient automotive supply chain allows Chinese companies to cope with supply chain constraints better than other countries and regions around the world. For example, although auto companies are facing chip shortages, Chinese auto companies can find alternatives. With a flexible approach, China's original equipment manufacturers (OEMs) are less affected than other countries and regions," he said.
According to data from the China Association of Automobile Manufacturers, from January to September this year, my country's auto production reached 19.632 million units, a year-on-year increase of 7.4%. Among them, the output of new energy vehicles reached 4.717 million, a year-on-year increase of 120%. The latest forecast from Auto Forecast Solutions, an automotive industry research organization, shows that in 2022, events such as core shortages and shutdowns may cause a loss of 3.5 million vehicles in the world, with serious losses in Europe and North America.
Cui Dongshu also told the first financial reporter that Chinese auto companies can produce more and more components. "Not only chips and batteries, but for some companies, except for tires, most of the other parts can be produced by themselves." He said, "In addition, my country's auto companies have their own production bases in many places across the country. It has created a certain ability to decentralize the supply chain. For the core component of chips, my country is relatively close to chip production places such as Southeast Asia, which also guarantees the supply of chips to a certain extent.”
Cui Dongshu further stated that for manufacturing companies such as automobiles, economies of scale can effectively reduce costs. For example, the more cars a car company produces, the lower its unit cost of producing cars, which can reduce the final selling price of cars, and then Improve its "cost performance" in overseas markets.
Will the export momentum continue?
The number of my country's auto exports has increased for several months in a row. Will this momentum continue in the future? According to Cui Dongshu, the answer is yes. "Countries and regions such as Europe and the United States are promoting the transformation of automobile electrification, which means that the demand for electric vehicles will continue to increase in the future, but the current supply of electric vehicles is still insufficient. This means that in the above-mentioned markets, electric vehicle companies will have opportunities .”
In late October, negotiators from the European Parliament and EU member states reached an agreement to ban the sale of new cars with internal combustion engines in the bloc from 2035. In August, U.S. President Joe Biden signed the Inflation Reduction Act, which stipulates that the final car assembly in North America, a certain percentage of key minerals for car batteries come from U.S. free trade agreement partners, and a certain percentage of battery components are manufactured in North America. Buyer is offered a $7,500 tax credit on purchase.
In Tai's view, this trend of increasing Chinese auto exports is likely to continue as Chinese brands continue to develop attractive models while taking advantage of the cost advantages of the Chinese supply chain.
Recently, the pace of my country's auto brands going overseas has gradually intensified. In October, BYD and Weilai Automobile successively released their European strategies. BYD plans to enter more than 10 European countries by the end of this year, and NIO will take the lead in launching business in four EU countries.
However, Cui Dongshu also reminded that my country's auto companies still face major challenges in going overseas. "One of the major problems is that the export market fluctuates greatly, especially for the European market, where land transportation is difficult. Especially in the context of the situation in Ukraine, the operation of China-Europe freight trains is relatively volatile, and it is difficult for seaborne export ships and ro-ro ships to effectively Obtaining the shipping schedule, currently the ro-ro ships are relatively tight, so it is more difficult to export." He said.
"Another big problem is that Chinese independent brands need to ensure that their product technology and standards meet European standards when participating in international competition, especially in testing, environmental protection and other aspects. In addition, electric vehicle products must be based on the individuality of European consumers. Need to do, targeted improvement, and a lot of work to adapt to localization and improvement, so as to get better satisfaction. At the same time, we also need to make some corresponding efforts in sales and maintenance.” Cui Dongshu further said.
Duan Wei also believes that China and Europe have different understandings of environmental protection, technology, and automotive products, both in terms of business and culture. "For example, environmental protection is something that European consumers pay more attention to, which is closely related to European culture. Products exported to Europe need to meet European high standards. In addition, my country's automobiles are exported to Europe, which is a relatively good market. It is in Norway, but it remains to be seen whether Norway’s experience can be extended to Germany and other places. Germany is a big car country, and its local consumers trust local car brands.”
"However, the above-mentioned problems are not only faced by Chinese auto companies, but all auto companies that want to open up the European market will face the above-mentioned problems. The solution lies in how to be one step faster than their opponents." He said.
