Forecast: every third car will be Chinese by 2030
Affordable production, faster development, lower margins. A study by the consulting firm Alix Partners reveals how Chinese automakers secure market shares, where this may lead, and what the EU tariffs could mean.
Chinese automakers are expected to have captured a third of the global market by 2030 and sell nine million vehicles outside China, according to Alix Partners' assessment. In Europe, this comes at the expense of European, Japanese, and Korean brands, the industry experts wrote in the study.
The production costs for an electric vehicle are estimated to be one-third lower in China than in Europe, and development cycles are shorter than those of global competition. With "an aggressive pricing strategy," Chinese automakers can convert these advantages into market shares. However, they reportedly forgo margins: The average margins of European automakers (15% on average) are significantly lower than those of the Chinese competition (approximately 7.1%).
Before the EU could protect the European auto industry, EU tariffs on Chinese cars could temporarily slow down imports and support sales prices. However, they would also accelerate the local production of Chinese cars and components in Europe, according to industry expert Fabian Piontek. The business model of the German automobile industry must change.
The Future Car Costs Suppliers Profits
The German manufacturers felt the competition from Chinese manufacturers in China as well, according to Piontek: "This particularly affects German premium manufacturers, who are losing an increasingly important market in China." The study by Alix Partners also found that the newer models of Chinese manufacturers have an advantage in terms of comfort and equipment. For their study, the consulting firm Alix Partners analyzed the balance sheets of manufacturers and suppliers, evaluated expert interviews, and conducted customer surveys.
In Europe, the market share of new electric vehicles is projected to increase from 20% in the current year to 45% by 2030, according to Alix. However, investments in e-mobility would be hindered by significant uncertainty about which solutions and infrastructures would ultimately prevail.
The future of the car is predicted by Alix to be determined at the software level. The loss of significance of pistons, driveshafts, and the like means two things: First, cars can be changed without having to touch a screw. Second, profits would shift – from traditional manufacturers and suppliers to software companies and technology firms. Chinese manufacturers also have an advantage here.
- The rise of Chinese carmakers in the global market, as predicted by Alix Partners, is significantly impacting the economy, with these manufacturers expected to sell nine million vehicles outside China by 2030, including in European markets, which could result in lower sales for European, Japanese, and Korean brands.
- With lower production costs and shorter development cycles for electric vehicles in China, Chinese automakers are able to compete effectively in the electromobility market, offering affordable electric cars to consumers and securing market shares using an aggressive pricing strategy, even if it means sacrificing margins.
- China, being a major player in the global automotive industry, is already exporting electric cars and components to Europe, and local production in Europe could potentially increase further with the implementation of EU tariffs, giving Chinese manufacturers an opportunity to strengthen their presence in the European market and potentially disrupt the business models of traditional European automakers.
