China Electric Cars Industry Trounces the European Market
Finance, Industry

China Electric Cars Industry Trounces the European Market 

Last updated on September 9th, 2020

The country that gave the world some of its top automakers, Europe is on the verge of losing out to China electric cars business in the race to define the future of its industry, which employs millions of people across the continent.

The European leaders consider electric vehicle batteries as vital for their auto industry and its future. However, at present, China is the driving force in this business. Besides, it is being asserted that it is too late for Europe to catch up.

Simone Tagliapietra, an energy analyst at Fondazione Eni Enrico Mattei, a Milan-based think tank, said, “Europe might well see its carmakers massively moving production to China in the future.”

He added that “this is a huge risk” for the nation that’s home to some prominent automobile companies, such as Volkswagen (VLKAF), BMW (BMWYY), Mercedes-Benz and Renault (RNSDF).

Companies are picking up China electric cars industry for manufacturing because it is a giant market and has most of the customers. Besides, they are able to set up their manufacturing plants in proximity to the supply chain for batteries.

Tagliapietra said, “It just makes sense to produce electric vehicles where batteries are also produced.”

Batteries account for about 40 per cent of the value of electric cars, and lithium-ion batteries are most commonly used in these vehicles.

According to a consulting firm Wood Mackenzie, China has two-thirds of the world’s manufacturing capacity for lithium-ion batteries. Whereas, Europe is estimated to have just 1 per cent of the market.

Wood Mackenzie’s research director of global metals markets in London, Gavin Montgomery said, “There’s a few smaller European facilities, but nothing significant.”

Analysts have asserted that one of the major reasons to why Europe has been lacking far behind in the battery industry is that its automakers were slow to develop electric cars.

On the other hand, China has the advantage of being the biggest market for electric vehicles. International carmakers are making investments in country, which accounts for nearly half of the global sales.

Moreover, most of the nascent battery companies of Europe are now preferring t0 invest in China rather than in their home country.

This month, a Netherlands-based firm, Lithium Werks announced its plans to build a €1.6 billion ($1.8 billion) factory outside Shanghai with a local partner. Chairman of the company, Kees Koolen told CNN that he was investing in China electric cars market because of the better infrastructure and the simplified process of attaining permits to set up a factory.

He said, “In Europe there’s a lot of hassle and a lot of procedures to follow. It takes a long time.” The company also said that it was put off by the amount of red tape needed to invest in the European market.

Koolen added that the Chinese government has a “long-term vision” for the industry, while Europe does not.

Many are asserting that it is already too late for Europe to cope up with the existing gap with China electric cars industry. On the other hand, some analysts have asserted that the last hope for Europe is to take the same approach as it did with Airbus (EADSY) in the aviation industry, which might prove to be “game changer” for the industry of electric cars in Europe.

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