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Europe struggles to compete with China in the electric vehicle market

European carmakers are racing to produce low-cost electric vehicles (EVs) in an attempt to catch up with China’s early market lead. This topic was a point of discussion among industry leaders at the IAA Mobility Show in Munich.

Renault CEO Luca de Meo said the French carmaker aims to close the cost gap with Chinese companies such as BYD, Nio and Xpeng by reducing manufacturing costs. Renault’s upcoming R5 EV is expected to be 25-30% less expensive than its current electric models Scenic and Megane.

Chinese EV companies are aggressively targeting Europe, where EV sales are up roughly 55% to around 820,000 vehicles in the first seven months of 2023 alone. This growth now accounts for 13% of all car sales in the region. Xpeng has plans for European expansion in 2024, while Zhejiang Leapmotor Technology will launch five models for the European market in the next two years.

A recent report from Inovev noted that 8% of new electric vehicles sold in Europe this year were of Chinese origin, up from 6% in 2022 and 4% in 2021. With Asian-based companies representing 41% of exhibitors at the Munich event, concerns are growing that Chinese brands could dominate the European electric vehicle market.

High-ranking industry figures such as Hildegard Mueller, president of the German Association of the Automobile Industry, have expressed concern about European competitiveness in the electric vehicle sector. Similarly, BMW CEO Oliver Zipse warned that the low-end car market could disappear or be overtaken by Chinese manufacturers if Europe does not step up its efforts.

Volkswagen aims to halve the costs of battery cells through its partnerships in China, addressing a major component that comprises up to 40% of the total cost of an electric vehicle. Xpeng chairman Brian Gu praised the “tremendous commitment” of European carmakers to invest in EV technology, suggesting it is too early to count them out of the race.

Industry experts agree that Europe must invest more in electrification to remain competitive. As pressure mounts, it will be crucial for European carmakers to accelerate their adaptation to changing market demands.

This article is sourced from and written by AI.

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