Chinese electric vehicle (EV) makers have set their sights on winning over European drivers and large corporate customers with more affordable cars that have high safety ratings and a host of high-tech features.
Over the past few months, several Chinese electric vehicles have received a five-star European New Car Assessment Program (NCAP) rating, an achievement that requires vehicles to be loaded with active and passive safety features that go far beyond legal requirements.
“All Chinese electric car makers want to get a five-star Euro NCAP rating to be more competitive in the European market,” said Brian Gu, president of Chinese electric car maker Xpeng ( 9868.HK ).
Gu said Xpeng has spent the past three years building stores and service centers in Denmark, the Netherlands, Norway and Sweden – with some initial sales in Norway – ahead of the official launch of its P7 electric sedan and G9 sports car (SUV) next year. ) in four countries.
Chinese electric car makers have recognized that safety plays an incredibly important part of the sales process, said Matthew Avery, director of Thatcham Research, a British insurer-funded car think tank and board member of Euro NCAP.
The five-star Euro NCAP ratings are seen as a key to overcoming residual European concerns about the quality of Chinese-made cars after horrific crash test failures in 2006 and 2007 that created the impression that cars from China are unsafe.
Perhaps more importantly for sales, the high safety ratings also open up a potentially huge corporate fleet market for Chinese electric car makers.
Fleet sales account for around half of all car sales in major markets including Germany, France and the UK, and many corporate buyers prioritize safety.
“Fleet sales are very important, and many fleets have a mandatory five-star rating for car purchases,” Avery said.
CAR RENTAL COMPANIES
Moreover, many fleets want to quickly switch to electric vehicles in order to meet the goals of sustainable development. But corporate fleets are struggling to get enough electric cars in Europe as supply chain issues have pushed waiting times for some models to more than 12 months.
Strong demand for electric vehicles amid tight supply chains has allowed European automakers to raise electric vehicle prices and focus more on retail customers, rather than customers such as rental car companies, which have traditionally been less profitable for them.
This has created a window of opportunity for Chinese electric vehicle manufacturers, who have already beaten most foreign competitors in China, by far the largest electric vehicle market in the world.
For example, German car rental company Sixt ( SIXG.DE ) said in October it would buy about 100,000 electric vehicles from BYD ( 002594.SZ ), starting with the Atto 3 SUV, which received the coveted five-star Euro NCAP rating the same month. .
China’s Great Wall Motors ( GWM ) ( 601633.SS ) received five stars in September for its WEY brand Coffee 01 hybrid SUV and ORA brand Funky Cat electric sedan.
European carmakers are also pushing for five-star ratings for their electric cars and hybrids, from BMW’s ( BMWG.DE ) iX to Volkswagen’s ( VOWG_p.DE ) ID.4 and ID.5. In October, Mercedes received a top score for its EQE sedan, with its driver assistance features receiving their highest marks to date from Euro NCAP.
Chinese electric car maker Aiways has yet to have its U6 electric crossover tested by NCAP, but it is also in the running for the top rating, said Alexandre Klose, who heads the carmaker outside of China.
He said Aiways had invested in additional safety features for the U6 to open sales opportunities to European fleets, including rental car firms, when it goes on sale next year.
“There will be natural demand for cars like ours that are fully equipped and sold at very competitive prices,” he said, adding that Aiways hopes to sell 30,000 electric cars in Europe in 2023, up from about 5,000 this year.
BASIC REQUIREMENT
French automotive consultancy Inovev said around 155,000 Chinese-made cars were sold in Europe in the first nine months of 2022, or 1.4% of the market. Chinese firms are on track to reach 150,000 vehicles this year, almost double the 80,000 sold in 2021.
But according to Inovev, almost half of the Chinese cars sold were electric vehicles, giving them a 5.8% share of the European all-electric car market.
Inovev Vice President Jamel Taganza said all Chinese cars sold in Europe will be electric within a few years, with cheaper models on the way.
Inovev estimates that electric vehicles will account for 40% of new car sales in Europe by 2030, with Chinese brands accounting for between 12.5% and 20% of this all-electric market, with sales of between 725,000 and 1.16 million vehicles.
“This is a conservative estimate,” Taganza said. “But it could grow faster, especially if European automakers fail to meet Europe’s need for affordable electric vehicles.”
Achieving a five-star rating is expensive for automakers because it means investing in extra safety features from supplemental airbags to collision avoidance systems, driver assistance and control systems.
Thatcham’s Avery said that Chinese electric vehicle manufacturers are actively engaging with Euro NCAP and are willing to make the investments needed to achieve the top ratings.
“Forget the fact that you might think that Chinese means lower quality or lower safety scores,” he said. “Their quality is now better than others.”
BYD is launching three vehicles in several European markets and will add new models and markets next year, all of which should have top safety ratings, said Michael Shu, managing director of BYD Europe.
“We believe that a five-star rating should be a very basic requirement,” he said.
“USE THIS ADVANTAGE”
Meanwhile, Great Wall Motor’s ORA Funky Cat will launch in the UK, Germany, Ireland and Sweden later this year.
Starting at £32,000 ($36,330) in Britain, or around £5,000 less than the VW ID.3, the Funky Cat’s features include facial recognition to save seat settings, driver assistance systems, a reversing camera and wireless phone charging .
Toby Marshall, director of sales and marketing for the GWM ORA brand in the UK, said that if a car is well-made, packed with features, has a high safety rating and is competitively priced, it no longer matters where it was made.
“These are key ingredients that are important to car buyers,” Marshall said as he demonstrated the Funky Cat at his office in Solihull, central England.
Bill Russo, head of consultancy Automobility Ltd in Shanghai, said the problem with many international carmakers is that they have lost ground to Chinese rivals when it comes to making low-cost electric cars.
“The only place on the planet where you can find an affordable electric car today is China,” Russo said. “And they’re taking advantage of that.”
