The danger is European Made in China, not Chinese electric cars

Many industry players, ranging from manufacturers to analysts, constantly warn of the dangers that Chinese cars , especially those running on electricity, pose to our Western economies. However, it is important to remember that we actually have an enemy within us. The real problem lies not with the Chinese brands, but rather with the Western brands themselves who manufacture and export cars to Europe from China.

China is poised to become the world's second-largest car exporter , overtaking Germany, the United States and South Korea and trailing Japan. This situation carries risks for Europe and could generate new tensions with its trading partners and rivals.

According to data from the China Passenger Car Association , the number of Chinese-made car exports to overseas has tripled since 2020, reaching more than 2.5 million last year.

However, in terms of export value, China currently ranks 12th with $22.4 billion, far behind Germany at the top with $139 billion, as well as regular players such as Japan, the United States , South Korea, Mexico and Spain.

Although China maintains its leadership in the Middle East and Latin American markets due to its high production volume, it is important to point out that the value of locally manufactured cars continues to increase, thanks in particular to brands such as Tesla, Volvo, Polestar and BMW , not just local brands such as Nio, BYD or Xpeng .

According to Eurostat figures for the year 2021 , more than 435,000 cars were exported by China to the European Union. According to Jato Dynamics analysts, China is the second largest producer of electric cars sold in Europe.

About 25% of electric cars sold on the Old Continent in 2022 (or about 397,000 cars) were made in China, largely thanks to Tesla, including the Model 3 as well as almost all of the Model Ys sold in Europe from China.

Many Western brands sold in Europe resort to manufacturing their models in China. This practice affects more brands than you might think, especially high-end cars. The following models are affected, although for Tesla this is not the case for all units:

• BMW iX3
• Citroen C5X
• Dacia Spring
• DS 9
• Polestar 2
• Polestar 4
• Tesla Model 3
• Tesla Model Y
• Volvo S90

To which must be added the CUPRA Tavascan and Audi A6 Avant e-tron by 2024 and 2025  .

Why manufacture in China to sell in Europe?

European and American brands are encouraged to produce in China for sale in Europe, and this varies by car. The reasons are multiple and depend on the model in question. For example, certain models which are top of the range for a manufacturer but which are in low demand in Europe are manufactured in China in order to meet the priority demand of the Chinese market.

The Volvo S90 is transported by train to Europe, which is strange, as is the DS 9 , because the demand for sedans in Europe is already anecdotal outside of the Audi, BMW and Mercedes brands , while in China this demand remains strong. The Citroën C5X is also a model mainly intended for the Chinese market.

When it comes to electric cars , from the Dacia Spring and Polestar 4 to the Tesla Model 3 and the upcoming CUPRA Tavascan , the availability of supplies and cost are the main considerations. Indeed, it is considered that the manufacture of electric cars in China is around 10,000 euros cheaper than in Europe due to the supply chain.

In terms of supply, China has complete control over the production of batteries used in electric cars, from the extraction of raw materials to their final installation in vehicles. It is responsible for producing 78% of cathodes and 91% of anodes, for example, and produces 70% of batteries for electric cars globally.

The low cost of energy in China plays an important role in this area, especially when manufacturing electric cars. It should also be pointed out that CO2 emissions are not subject to legal regulations in China, despite the fact that 57% of electricity in the country is produced from the combustion of coal.

Automotive brands are following Apple's lead in manufacturing in China, as indicated by the " Designed by Apple in California. Assembled in China " label on the back of the iPhone. However, tensions are emerging as the United States has implemented protectionist measures to curb China's rise in the battery supply chain, via the Inflation Reduction Act .

The United States offers assistance of up to $7,500 for the purchase of an electric car, provided that the materials, battery and manufacturing are North American, including Mexico and Canada, to attract production on their soil.

This strategy is paying off, as Tesla has decided to transfer part of its cell production from Germany to the United States, Mercedes already manufactures the EQS SUV in the United States , and Honda and Hyundai plan to produce electric cars. locally.

In Europe, an environmental tax has been designed to limit Chinese imports of all types of products, including cars, with the aim of nullifying the economic advantage that products produced at low cost outside Europe have thanks to lax environmental laws or very dirty energy, as is the case in China.

However, its implementation is slow and will take several years to be effective.