The Paris Motor Show, which starts on Monday, gives pride of place to Chinese electric car brands. This is no coincidence: China has bet much more than any other country on these less polluting vehicles.
This year, the stars of the Paris Motor Show are not called Volkswagen, Fiat or even Mercedes and Citroën. The German, Japanese, South Korean giants and some French brands have decided not to participate in this show, which starts on Monday, October 17, and will last for six days. Much to the delight of Chinese manufacturers BYD, Ora and Wey, who hope to steal the show with their electric cars.
The Paris fair is one of the first – after more than two years of a pandemic that prevented the holding of most of the big races for lovers of four wheels – to show the general public how the electric car is reshuffling the cards in the car market in favor from China.
Is it Elon Musk’s fault?
More than half of the world’s top 10 electric car manufacturers are Chinese brands. They are led by BYD, which is just behind Tesla, the American industry star founded by Elon Musk, in second place. China now has around 300 companies that are building or wanting to build electric cars.
Another proof of China’s great electric leap: more than a quarter of new car registrations in China are for electric or hybrid vehicles, underlines the British channel BBC. That’s more than Europe and the United States combined.
Also, this Chinese wave started in 2018 in Shanghai with… Elon Musk. The Tesla boss was then the first to get permission from Beijing to establish a car factory without the need to partner with a local partner.
What does this have to do with the rise of “made by China” electric vehicles? “The authorities learned from their mistakes with the 1.0 car, that is, thermal. Then they forced Western manufacturers to create joint ventures with Chinese companies, which did not have the expected effects”, underlines Jean-François Dufour, an expert on the Chinese economy. and co-founder of Sinopole, a resource center in China. Beijing hoped these alliances would lead to technology transfers, allowing Chinese brands to fend for themselves. But the latter preferred to remain allied with the big Western names and pocket the profits of these joint ventures.
There is no question of following the same path with the “car 2.0”. In 2014, Xi Jinping said he wanted electric vehicles to be an opportunity for China to become an autonomous “automotive power”. Enough of the “joint ventures” issue: foreign brands – like Tesla – had to be seen as rivals to beat. The deal given to Elon Musk 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.
Beijing carrots and stick
An even simpler strategy to adopt in this sector “everyone starts from scratch”, continues the economist. There is not, as for thermal cars, a hundred years or more of history that made it possible to establish empires like General Motors or Volkswagen, difficult to compete with the Chinese newcomers.
The Chinese regime has also multiplied incentives over the years to encourage as many vocations as possible in this sector. Thus, the regional authorities “sponsored” local start-ups, which specifically means “that they could have 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. So it’s much more expensive to register a petrol-powered car, and in some cities EV drivers can drive in bus lanes and have access to free parking spaces, the BBC says.
Beijing also knows how to handle the rod. “Since 2018, a fine can be imposed on Chinese brands whose percentage of production is not reserved for electric cars”, specifies Jean-François Dufour.
This bet on the electric car is due to the fact that “it is in perfect synergy with the great national goals”, estimates the co-founder of the Sinopole office. This industrial priority is in line with the vision of a “greener” China promoted by Xi Jinping, in particular, during his opening speech on the 20th.and Congress of the Chinese Communist Party. The development of this sector “should also allow greater energy independence, given that China currently imports more than 70% of its oil”, observes Jean-François Dufour.
For now, most cars from BYD, GW (Great Wall, which owns the Ora and Wey brands), Nio and Xpeng are still exclusively on Chinese roads. “The domestic market remains its priority, because while it is not saturated, why not simplify and sell locally?”, explains to the BBC Ana Nicholls, director of industry sector analysis at the Economist Intelligence Unit, an analysis center attached to the magazine. British The Economist.
But the appetite for these brands is clearly global, as illustrated by their growing presence at international fairs. These groups “follow the traditional Chinese script that consists of betting on the huge domestic market in order to build an industrial and financial base sufficient to go on the international attack”, observes Jean-François Dufour.
A danger to the European economy?
Chinese manufacturers have already sold 500,000 electric vehicles worldwide in 2021 and aim to double their exports next year, underlines the Mercatour Institute for China Studies (Merics), in a study published at the end of May 2022. In Europe, Chinese brands already occupy 10% market share.
Given the leadership China is taking in this sector and the means Beijing is ready to put on the table to win the gamble, the Merics experts urge Europeans to react as quickly as possible.
They believe that, in the more or less long term, the entire European economy could end up upside down if the Chinese electric car is needed. Cars from brands such as Volkswagen or Renault have “long been among the main European exports, especially to China”, underline the authors of the Merics study.
If, with the advent of the electric car, Europe starts to import more cars from China than it exports there, “the consequences could be profound for the millions of stable and skilled jobs in the country. Financial Times.
This fear of the “Chinese threat” is beginning to be brandished in the halls of the Paris Motor Show to draw attention to calm the ardor of electric car supporters. “To generalize the electric car is to roll out the double-thickness red carpet under the wheels of the Beijing, Shanghai or Wuhan brands”, warns a representative of the Stellantis group, owner of the Peugeot, Fiat, Chrysler and Citroën brands, when questioned by The World.
“It’s a complex dilemma. Certainly, the economic risk exists, but to be on the safe side, are we going to postpone the adoption of a means of transport that can help reduce the impact on the climate?”, asks Jean-François Dufour .