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Chinese Cars Set to Dominate 15% of the Entire European Electric Car Market

Chinese automakers are poised to capture approximately 15% of the European electric car (EV) market by 2025. Renowned Chinese brands like BYD, Nio, and Li Auto are gaining significant traction among European consumers.

In a report released by KPMG, a multinational professional services network and one of the world’s four largest accounting organizations, it has been projected that this would represent a remarkable stride forward for Chinese car manufacturers. Last year, Chinese cars constituted less than 10% of the 1.1 million battery electric vehicles (BEVs) sold in Europe.

“Home-grown Chinese brands like BYD, Nio, Xpeng, and Li Auto hold immense potential in the European market and are expected to contribute significantly to increased sales in the future,” stated Kevin Kang, the chief economist at KPMG China in Shanghai during the first Carbon Neutrality Exhibition in China held on Monday (6th December 2023).

Europe stands as the second-largest and fastest-growing EV market globally, second only to China. The region is projected to experience a surge in demand for EVs following the European Union’s announcement of banning the sale of new fossil-fuel cars from 2035 onwards to combat climate change.

KPMG highlights that Europe accounted for about half of the 1 million new energy vehicles (NEVs) exported by China last year. NEVs encompass various types of vehicles such as BEVs, plug-in hybrids, and fuel cell vehicles.

“As Chinese EV manufacturers expand their presence by establishing more dealerships and factories overseas, while offering enhanced services and products tailored to international consumers, they are expected to gain increased brand recognition and expand their market share,” Kang further added.

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According to KPMG, Chinese manufacturers hold the advantage of offering affordable prices and a wide range of models that cater to diverse consumer needs. In 2022, the average price of a Chinese EV in Europe was around $30,000, whereas Tesla’s cheapest product, the Model 3, was priced at over $45,000.

In 2022, China’s NEV makers introduced an impressive lineup of 136 models for consumers to choose from, including 110 BEV models, placing China in the top spot globally.

“However, Chinese automakers still face challenges such as limited brand awareness among European consumers, insufficient understanding of foreign markets, and ineffective globalization strategies,” Kang highlighted.

As an example, Kang pointed out that the top three Chinese BEV models sold in Europe last year were Volvo, MG, and Polestar—European brands acquired by Chinese car companies. Meanwhile, BEV models manufactured in China accounted for less than 2% of all EVs sold in Europe, according to KPMG’s findings.

Norbert Meyring, the partner in charge of the auto industry for KPMG China, suggested that Chinese EV manufacturers could enhance their brand visibility by collaborating with local car dealerships or acquiring more local car brands.

“Establishing local dealerships, customer service centers, and production plants through greenfield investments is also a common and effective approach for Chinese automakers to penetrate overseas markets,” Kang stated.

BYD, headquartered in Shenzhen and having surpassed Tesla to become the world’s best-selling NEV brand last year, confirmed its consideration of constructing a factory in France just last month.

According to the European Association of Automobile Manufacturers, by 2030, electric cars are expected to comprise three out of every five cars on European roads.

“Exporting China’s new energy vehicles to Europe is a crucial step toward the globalization of China’s auto industry. It is an inevitable choice for China’s new energy vehicle sector,” remarked Michael Jiang, head of client and market at KPMG China.