Europe’s Electric Car Aspirations Are Being Trampled By China

While some of the largest auto companies have emerged from Europe, yet the region is apparently losing out to China in terms of electric cars.

China has developed into a powerhouse for the electric vehicle batteries which is considered critical by European leaders for driving the growth and popularity as well as prices of electric vehicles and the auto industry which is the employer of millions of people throughout Europe.

“Europe might well see its carmakers massively moving production to China in the future,” said Simone Tagliapietra, an energy analyst at Fondazione Eni Enrico Mattei, a Milan-based think tank. “This is a huge risk” for the continent which is the headquarters for companies such as Volkswagen, BMW, Mercedes-Benz and Renault, he added.

China is the largest growing market for electric cars and hence it is inevitable the car companies would find it meaningful to manufacture electric and other hybrid cars there. Additionally, heavy taxes on imported vehicles imposed by China are also able to be avoided by the foreign car makers through this strategy. Further, this strategy also helps the aito makers to locate their manufacturing bases close to the supply chain of car batteries for electric vehicles which accounts for about 40 per cent of the ultimate cost of an electric vehicle.

“It just makes sense to produce electric vehicles where batteries are also produced,” Tagliapietra said.

According to data from consulting firm Wood Mackenzie, the number of lithium-ion batteries which is the most common type of batteries used in electric vehicles, that are manufactured in China accounts for about two-thirds of the world’s manufacturing capacity.

Just about 1 per cent of that battery market is belongs to Europe. “There’s a few smaller European facilities, but nothing significant,” said Gavin Montgomery, Wood Mackenzie’s research director of global metals markets in London.

Accounting for about half of global sales, China has the advantage of being the world’s biggest market for electric vehicles. And this drives global car makers to manufacture as close as possible to the Chinese market.

China is also turning out to be the preferred manufacturing destination for Europe’s nascent battery companies.

For example, announcement of manufacturing of a new €1.6 billion ($1.8 billion) factory outside Shanghai with a local partner was made by Netherlands-based Lithium Werks. The company already has two manufacturing units in China.

“In Europe there’s a lot of hassle and a lot of procedures to follow. It takes a long time,” said Lithium Werks Chairman Kees Koolen. The Chinese government has a “long-term vision” for the industry, which is not the case in Europe, he added.

“Europe has not been able to develop a coherent and solid industrial policy,” Tagliapietra said.

The largest player in the global lithium ion battery market is a Chinese company called CATL. This Chinese company rivals with the likes of Japan’s Panasonic and South Korea’s Samsung SDI.

(Adapted from Money.CNN.com)

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Categories: Creativity, Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability, Uncategorized

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