“The European manufacturers did not see the Chinese coming”

Mondial Auto 2022: a mixed record

Foreign manufacturers have avoided it, visitors are less numerous. Does the Mondial de l’Auto still have a purpose?

We see it everywhere, in Munich, Las Vegas and elsewhere, these big events no longer appeal to consumers. The visitors who come are car enthusiasts. And the exhibitions are fighting to bring back foreign manufacturers: the German or Italian, American and Japanese brands are no longer at the Paris Motor Show. Even Citroën is conspicuous by its absence. The other French manufacturers are still present, as well as the Chinese, who are preparing their arrival in Europe. Participating in an event of this type is very expensive and there is not much to gain. It is a good showcase, but today there are other ways to communicate or present new models than these advertising fairs.

Which models in the future?

Between the 4L, which has been transformed into an SUV, the classic models that Peugeot converts to electric or the Ami without a license from Citroën: the French manufacturers seem a little lost…

We are in a crucial period for the car industry, in full turmoil. The sector’s economic actors, and not least, know that they are heading towards a different future, but what will it be? The advent of the electric car is pushing them to revise their choices. However, investment cycles in cars are so long that manufacturers put bullets everywhere.

Until now, the manufacturers were pretty much in denial, believing they could dictate the pace. As major economic actors, they weighed in the economy, in politics. But Dieselgate reversed all this and swept away this balance of power. Public opinion said to itself: “They lied to us once, they can do it again”. While the manufacturers said that electric cars were not ready, Tesla demonstrated that it worked for twenty years. In fact, the European manufacturers, and French, were not ready and they started late.

From what we see at the Paris Motor Show, manufacturers are going all over the place, on small, medium and large models, waiting to see what works or not.

“Models that are too heavy or too expensive are set to disappear with the electric”

What should the electric car look like?

What is certain is that the Swiss Army Knife car is over. On the one hand, we will have small monofunctional vehicles with low power batteries, the most relevant model at an environmental level according to Ademe. And then we must have models for the family and longer distances. It’s been on the table for twenty years, but consumer anxiety means the equation has never worked, the ranges haven’t evolved.

Manufacturers think of the electric car as a thermal vehicle. There is no real break. The overriding issue is always autonomy. But the mile race is over, we have to change our point of view. Models that are too heavy or too expensive are set to disappear with the electric. Few manufacturers innovate or explore new avenues. Ahead of the Paris Motor Show, Citroën unveiled Oli: lightweight, interchangeable parts. It is interesting. But we don’t see many original concept cars circulating the streets in the end.

The Chinese giants ready to land

The Chinese brands, very present at Mondial, have not yet exactly invested our streets. Are they really ready?

China has already converted to electric with 3.5 million cars sold by 2021 (more than in Europe). Giants have appeared in recent years, big companies with big funds: BYD, for example, offers a wide range of electric vehicles, sells more cars than Tesla, at more affordable prices, and has a very well-organized implementation plan for Europe: within five years, he is preparing to deploy an entire network of dealers in well-targeted cities.

And above all, BYD has just entered into an agreement with the German rental company Sixt for 100,000 vehicles by 2028, which will allow it to fit into the landscape and create a customer experience to convince consumers. It is clear that European manufacturers did not see this Chinese competition coming at all and underestimated it, just as they had not seen the arrival of the Japanese brands in the 1980s.

Electric at any price?

Will the arrival of Chinese cars help bring prices down?

CEO of Stellantis (Peugeot Citroën), Carlos Tavares, said that by 2026 the price of an electric vehicle would be equivalent to the current price of a thermal vehicle. This message seems risky to me. Two-thirds of the cost of the battery is based on the cost of materials, especially lithium. With the development of electricity, the demand explodes. Prices are very volatile and the trend rather bullish. Knowing that manufacturers will not have control over this lever, this prediction is very premature.

Which lever will therefore be able to encourage the French to buy an electric vehicle?

Today, electric cars are bought by people who can afford them. In order to bring their prices down to an affordable level, the transitional subsidy must be strengthened. This is what Norway is doing, which is 65% electric cars in car sales in 2021 (10% in France).

As for long-term rentals, it’s a bogus solution. The green argument collides with the economic argument, still very far from the concerns of French people living in the outskirts who need a car every day for all their trips.

President Emmanuel Macron, together with the CEO of Stellantis, Carlos Tavares, confirms the state’s support for the development of the electricity sector in France.


Reindustrialization and hydrogen

Is electricity an option to move factories in France?

With its gigafactory in Douai, for example, Renault has fully embraced the challenge: for the manufacturers, it is crucial to set up final assembly in France. In recent years, successful models were manufactured abroad. But the majority of sales of electric models take place in Western Europe, the move will make it possible to play on logistics and distribution costs. The government must encourage this return, especially since the presence of factories will reconstruct the supply chain and attract subcontractors who had also ended up moving.

What should we expect from hydrogen cars?

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