China-made Electric Cars Quietly Conquering European Market
China-made electric cars are quietly taking over the European market.
Contrary to popular belief, the best-selling Chinese electric cars in Europe are not produced by the established new energy giant BYD, nor by traditional auto groups Geely and SAIC. Instead, they come from an obscure automaker called EGT New Energy Automotive.
EGT is relatively unknown, unless one specifically mentions its joint venture status with Dongfeng and Renault-Nissan Alliance. Many people have forgotten about this company, which remained after Renault exited the Chinese passenger car market.
However, this company has launched the Dacia Spring model, which has quickly become the new favorite of local consumers after landing in Europe. In October of this year, Dacia Spring became the third best-selling pure electric car in 26 European countries on the European car sales chart. This small and affordable car has sold very well and can be regarded as the European version of the “Hongguang Mini EV”.
According to JATO, an authoritative automobile research and consulting firm, Dacia Spring sold 5277 units in a single month in October this year, surpassing many electric cars under Volkswagen and Fiat, and ranking third in the pure electric segment in Europe. What is even more special is that Dacia Spring made the list as a pure imported car, while other models on the list were locally produced in Europe.
Looking at the car wholesale data released at the press conference of China Passenger Car Association, EGT sold 40,000 cars from January to October this year, but the number of car insurances of this model in China was zero, which proves that the 40,000 cars sold by EGT should have been exported to Europe. It is believed that Dacia Spring will continue to sell well in Europe in the future.
This begs the question, why can such a car model become a darling of the European market? And why can imported cars from China make it onto the sales charts in the highly-regulated European market? Can other automakers emulate this model of production in China for sale in Europe?
To answer these questions, we cannot just look at the European market, but we must also look back to the origin for answers.
A00 grade is popular in Europe too
Dacia Spring is the cheapest electric car on the European market.How Cheap is Dacia Spring? In Dacia’s home country Romania, the starting price of the Dacia Spring is as low as 7,700 euros, which is about the price of 2-3 electric bicycles locally.
The reason behind this very low price is due to the European new energy vehicle subsidy policy. In 26 European countries, the Dacia Spring can receive a car purchase subsidy of up to 9,570 euros in Germany, while in Romania, the car purchase subsidy can be as high as 10,000 euros. Other European countries also offer car purchase subsidies ranging from several thousand euros.
According to a report from BALKAN Green Energy News, the Dacia Spring was launched at a price of 18,100 euros. After the Romanian government subsidy, the actual purchase price for consumers can be as low as 7,700 euros. Therefore, within 4 hours of its launch, the Dacia Spring’s pre-order volume reached 1,500, and Dacia had to temporarily close the pre-order.
1,500 vehicles is equivalent to the total sales of electric vehicles in Romania for the entire year of 2019.
Romania is currently implementing the Rabla Plus 2021 policy. Consumers can receive a subsidy of 400 euros for scrapping an old car and a subsidy of 10,000 euros for purchasing an electric vehicle. After cross-subsidy, purchasing a Dacia Spring can receive a subsidy of up to 10,400 euros (about 75,000 yuan).
Government subsidies, which have been repeatedly criticized by European trade departments, are seen by consumers as “subsidies are great.” However, the actual purchase price after the subsidy is low, and the car products must also have sufficient competitiveness to be accepted by consumers.
The product competitiveness of the Dacia Spring in the European market has an appropriate analogy in China: the Wuling Hongguang MINI EV.
Their technical characteristics are very similar, capable of sufficient endurance and flexible handling. They also face a very similar market environment where the overall price of electric vehicles in the market is generally high, and consumers need an affordable electric mobility vehicle.
The Dacia Spring has a length of 3.7 meters and can easily navigate through narrow European city streets. Its three-electric system adopts a 26.8 kWh tri-metal lithium battery pack, with a NEDC range of 271 km and a WLTP range of 230 km. It is equipped with a 33 kW permanent magnet synchronous motor and has a maximum output torque of 125 Nm. It can reach a top speed of 120 km/h and comes standard with ESP body stability control and AEB automatic emergency braking system.#### From the perspective of parameters, Dacia Spring reminds people of Renault’s previous Renault E-NUO, which was not selling in China, understandably, due to pricing far behind the average level of the Chinese market. However, in Europe, Dacia Spring’s pricing is far superior to its competitors, with electric vehicles that meet WLTP standards and a range of 230 kilometers available for 10,000 euros. The second cheapest electric car on the European market, the Smart Fortwo electric version, sells for about 25,000 euros, but only has a range of 81 kilometers (WLTP standard).
Expensive prices are a common phenomenon in the European electric vehicle market, and even some low-priced models may not meet consumer demand in terms of key parameters such as range.
The Dacia Spring’s popularity may show the embarrassing situation in the European market where there is a lack of low-priced electric vehicles for commuting. As an A00-class positioned electric vehicle, Dacia Spring can win a place in the European car market as an imported vehicle, which proves that A00-class electric vehicles in the European market may be a new growth point, similar to China.
New Chinese manufacturing mode of electric vehicle industry
Dacia is an electric vehicle built under the new cooperation model between Dongfeng and Renault-Nissan, which fully utilizes the scale advantage of China’s electric vehicle industry chain.
Made in China, sold to Europe.
Although Dacia Spring’s price includes a 10% import tariff on European imports, it does not affect the car’s status as the cheapest electric vehicle on the European market. Even in France, where new energy vehicle subsidies are relatively low, the cost of purchasing a Dacia Spring is only about 17,000 euros.
The core reason why Dacia Spring can achieve such a low price is due to China’s industrial chain advantages.
Dacia Spring is an oil-to-electric conversion model, and the prototype vehicle is Renault’s popular small car KWID sold in the Indian market. Renault began developing electric vehicles based on the KWID as early as 2017, and the project was managed by EGT, a joint venture between Dongfeng and Renault-Nissan.
After EGT managed the KWID project, the most important decision was to build the KWID project based entirely on the Chinese supply chain system.
According to reports from Shiyan Evening News, in February 2018, EGT signed a contract with the Shiyan Municipal Government and officially moved to Shiyan, Hubei. In terms of production, the EGT KWID project adopts the mode of “one car, multiple products, commissioned processing, unified R&D design management, and multi-channel sales”. It did not build a new factory but carried out adaptive transformation based on the original Dongfeng Xiaokang production line.In the electric vehicle parts industry, the most expensive component is the power battery, which is precisely the advantage of the Chinese electric vehicle industry chain. The number of power battery suppliers in China is much higher than that in Europe. The power battery suppliers selected by Yichieh Tech are CATL (Contemporary Amperex Technology Co., Ltd) and EVE Energy (Eve Energy Co., Ltd.).
In September 2017, according to CATL’s announcement, Yichieh Tech and CATL reached a cooperation agreement, making CATL the exclusive supplier of power batteries for Yichieh’s KWID project. In 2019, EVE Energy announced that it had become Yichieh Tech’s designated supplier of power battery cells and system solutions for the same type of product.
For on-board chargers and high-low voltage controllers, Yichieh Tech selected Fortune Tech. For the electric drive system, Yichieh Tech chooses Shanghai Electric Drive Co., Ltd.
Among these three system suppliers, CATL and EVE Energy are second-tier enterprises in the Chinese power battery industry, while Fortune Tech and Shanghai Electric Drive are start-up enterprises developed in the wave of new energy vehicles in China. Their common feature is that they have a strong desire to enter Yichieh Tech’s supply chain when faced with Yichieh Tech and its backers, Dongfeng and Renault-Nissan Group. As long as the automakers pay promptly, they are expected to cooperate in all aspects, including pricing.
In addition to the three core components, Yichieh Tech’s supply chain purchases all components such as axles, seats, rearview mirrors, and stamping parts locally at its factory in Shiyan, fully leveraging the industrial chain advantages of Shiyan as an old automobile industry base.
The low price of the Dacia Spring shows the advantages of the Chinese electric vehicle industry chain in terms of automotive parts and three-electric components. It also demonstrates the advantages of an intelligent component system in the Chinese automotive industry chain.
Although the Dacia Spring is inexpensive, it is still equipped with a 7-inch touch screen, backup camera, parking radar, GPS navigation, and Bluetooth functions, which are precisely the weaknesses of European car companies. These features are generally not included in low-priced models in Europe, or only partially equipped, such as the Smart EQ Forfour, which does not have these features.
In the process of Chinese cars going global, each carmaker has its own methods, including direct acquisition of foreign carmakers and brands, or entering the local market through agents. There are not many examples of developing and producing cars in China through joint ventures and selling them back to the parent country of the joint venture brand.
In the field of electric vehicles, Yichieh Tech is the first carmaker to succeed, and so far, it appears to be a successful venture. According to public information, Yichieh Tech plans to have a production capacity of more than 300,000 vehicles in the next five years. For the Chinese market, a production capacity of 300,000 vehicles is not aggressive, but it may have a chain reaction in the European market.
Why does the automaker feel compelled to focus on smart luxury in exporting cars?The success of Hongguang MINI EV and Dacia Spring proves that pure electric A00-class commuter cars are not only needed in the Chinese market, but also in the European and global markets.
In the past year, the speed of Chinese electric vehicle products going global has significantly increased, but there are different approaches.
The most traditional way is to produce the whole vehicle domestically and export it through trade exports, which has both profit and export tax rebates. This approach’s most successful representative is Tesla, with the Shanghai factory exporting about 50,000 to 70,000 models every quarter to global electric vehicle markets.
The whole vehicle export model for Chinese domestic brands has progressed relatively slowly. Electric cars from Chinese car companies such as BYD, XPeng, and Great Wall Euler have just taken the first step, establishing their own dealer networks locally and starting to sell their own electric car products.
SAIC Group is slightly different, although they also domestically produce the entire vehicle and export to overseas markets. SAIC Group’s exported vehicle models are associated with the UK brand MG and LDV, giving them a slight advantage in branding.
The most unique approach is that of NIO’s. NIO not only exports whole vehicles but also announced the construction of NIO House in Norway and transferred its battery-swapping network and service system to Norway. This is a bold attempt, as NIO not only exports whole vehicles but also hopes to output the NIO brand to European countries.
Yi Jie Te is the most unique of all. Its approach involves using the comprehensive advantages of the Chinese electric vehicle industry chain as a Sino-foreign joint venture to domestically produce cars, affixing the joint venture brand logo, and exporting them overseas as a whole vehicle.
Chinese auto product export methods are diverse, but most car companies prioritize their flagship and high-tech value-added products in overseas markets, hoping to achieve both fame and fortune.
What makes Yi Jie Te different is that this company has no brand baggage, making its approach more practical. After proving themselves in the Chinese market, they use the low-cost advantages of the Chinese industrial chain, and then use the branding resources of joint venture car companies to output domestically produced vehicles to the European market.
Chinese car companies have rich experience in small and micro electric vehicles in terms of product quality, manufacturing costs, and policy changes. However, these car companies lack the brand resources that Yi Jie Te has, so in the process of going global, while the model selection is diverse, the product types pursued are large-scale, expensive, and new.Change perspective. Since automotive products like Dacia Spring (Renault K-ZE) that cannot survive in the Chinese market can sell well in Europe, why should Chinese automakers focus solely on exporting expensive luxury smart cars?
Without trying, who knows if the European market does not need A00-class small cars?
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.