the electric car will be Chinese or not

The Paris Motor Show, which begins on Monday, is giving Chinese electric car brands the spotlight. This is no accident: China has invested much more than any other country in these less polluting vehicles.

This year, the stars of the Paris Motor Show are not named Volkswagen, Fiat or even Mercedes and Citroën. The German, Japanese, South Korean giants and some French brands have decided not to take part in this show, which starts on Monday 17 October and lasts for six days. To the delight of the Chinese manufacturers BYD, Ora and Wey, who hope to steal the show with their electric cars.

The Paris show is one of the first – after more than two years of the pandemic that prevented most of the major routes for lovers of four wheels – to show the public how electric is changing the map of the car market in favor. of China.

Blame it on Elon Musk?

More than half of the world’s top 10 major electric car manufacturers are Chinese brands. They are led by BYD, which is close behind, in second place, Tesla, the American star of the sector founded by Elon Musk. China now has about 300 companies that build or want to build electric cars.

Another proof of the great Chinese electric leap forward: more than a quarter of new car registrations in China relate to electric or hybrid cars, emphasizes the British channel BBC. That’s more than Europe and the US combined.

Also, this Chinese earth swell began in 2018 in Shanghai with… Elon Musk. The Tesla boss was then the first to get permission from Beijing to set up a car factory without the need to associate with a local partner.

What does this have to do with the rise of “made by China” electric vehicles? “The authorities learned from their mistake with the 1.0, that is, thermal, car. They then forced Western manufacturers to set up joint ventures with Chinese firms, which did not have the expected effects,” emphasizes Jean-François Dufour, expert on the Chinese economy and co-founder of Sinopole, a resource center on China. Beijing hoped that these alliances would lead to technology transfers so that Chinese brands could stand on their own two feet. But the latter preferred to remain allied with the big western names and pocket the profits from these joint ventures.

There is no question of following the same path with “car 2.0”. In 2014, Xi Jinping said he wanted electric vehicles to be an opportunity for China to become an autonomous “auto power”. No more questions about “joint ventures”: foreign brands – like Tesla – were to be seen as rivals to beat. The agreement that Elon Musk got in 2018 to build his factory in China on his own was therefore less a gift to the multibillionaire than a “signal sent to encourage the emergence of competitors”, summarizes Jean-François Dufour.

Carrots and Pekingese

A strategy that is all the more simple to apply in this sector “everyone starts from scratch”, continues the economist. There is not, as in thermocars, a hundred years of history or more that have made it possible to establish empires such as General Motors or Volkswagen that are difficult to compete for Chinese newcomers.

The Chinese regime has also multiplied the incentives over the years to encourage as many vocations as possible in this sector. The regional authorities have thus “sponsored” local start-up companies, which concretely means “that they have been able to get easier access to bank loans at the best possible rate”, explains Jean-François Dufour.

Everything has been done to ensure that consumers choose electric cars as a priority. It is thus much more expensive to register a petrol-powered car, and in some cities electric drivers can drive in bus lanes and have access to free parking spaces, says the BBC.

Beijing also knows how to handle the stick. “Since 2018, a fine can be imposed on Chinese brands whose percentage of production is not reserved for electric cars”, clarifies Jean-François Dufour.

This bet on the electric car is because “it is in perfect synergy with the major national goals”, assesses the co-founder of the Sinopol cabinet. This industrial priority is in line with the vision of a “greener” China promoted by Xi Jinping, particularly during his grand opening speech on the 20th.e Chinese Communist Party Congress. The development of this sector “must also make it possible to achieve greater energy independence, whereas today China imports more than 70% of its oil”, observes Jean-François Dufour.

So far, most cars from BYD, GW (Great Wall, which owns the Ora and Wey brands), Nio and Xpeng still drive exclusively on Chinese roads. “The single market remains their priority, because as long as it’s not saturated, why not keep it simple and sell locally?” explains Ana Nicholls, director of industrial sector analysis at the Economist Intelligence Unit, an analysis for the BBC center linked to the British magazine The Economist.

But the appetite for these brands is clearly global, as illustrated by their ever-increasing presence at international fairs. These groups are “following the traditional Chinese road map, which consists of betting on the huge domestic market at the moment to build a sufficient industrial and financial base to go on the international offensive”, observes Jean-François Dufour.

A danger to the European economy?

Chinese manufacturers have already sold 500,000 electric vehicles worldwide in 2021 and plan to double their exports next year, underlines the Mercator Institute for China Studies (Merics), in a study published at the end of May 2022. In Europe, the Chinese brands already occupy 10% market share.

Given the lead that China is taking in this sector and the means that Beijing is ready to put on the table to win the bet, the Merics experts urge the Europeans to react as soon as possible.

They believe that the entire European economy can turn upside down in the more or less long term if the Chinese electric car is needed. Cars from brands such as Volkswagen or Renault have “long been among the most important European export products, especially to China”, the authors of the Merics study emphasize.

If, with the advent of the electric car, Europe begins to import more cars from China than it exports there, “the consequences could be profound for the millions of stable and qualified jobs in the country. European car industry”, concludes the Financial Times.

This fear of the “Chinese threat” has begun to be waved in the aisles of the Paris Motor Show to encourage the ardor of electric car supporters. “To generalize the electric car is to roll out the double-thick red carpet from under the wheels of brands from Beijing, Shanghai or Wuhan”, warns a representative of the Stellantis group, owner of the Peugeot, Fiat, Chrysler and Citroën brands, then of The World.

“It is a complex dilemma. The economic risk certainly exists, but to guard against it, do we want to delay the adoption of a means of transport that can help reduce the impact on the climate?”, asks Jean-François Dufour .

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