BYD is sending its own freighters
Is Germany threatened by the China car flood?
April 2, 2024, 8:56 p.m
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China’s car manufacturers want to bring their electric vehicles to Europe quickly – and are now setting sail themselves. Thousands of cars fit on each of their freighters. However, a trade conflict with the EU could have a significant impact on the export offensive.
When the “BYD Explorer 1” weighed anchor in the port of the southern Chinese city of Shenzhen, there was a lot of attention in Germany. There are more than 5,000 electric cars from BYD – China’s electric car leader – parked on board the freighter. Chinese car manufacturers have now discovered shipping for themselves. The almost 200 meter long “BYD Explorer 1” with space for up to 7,000 cars is the first so-called roll-on-roll-off freighter that is intended to bring the Chinese cars into the world. The fleet is expected to grow to eight ships within two years.
“The main reason to transport so many cars from China to Europe now is to reduce transport costs and make the industrial chain truly controllable and autonomous,” says expert Cui Dongshu. The head of China’s Passenger Car Association (CPCA) notes that carmakers were previously unable to book ships to take their cars to other markets.
Our own freighters, on which the cars can be transported up and off quickly at the destination port (roll-on/roll-off), made the schedules controllable and spared the companies from the restrictions that might arise from transport by other providers.
More freighters are coming
In addition to BYD, the state-owned car manufacturer Saic, which runs a joint venture with Volkswagen, also set sail in January with its first own car freighter, “Saic Anji Sincerity.” On board: 3,700 cars headed for Germany. The state-owned company Chery also expects to deliver its first freighter this year. Under the current conditions, a BYD ship needs around 100 days for a round trip, calculates Qian Renjie from the Duisburg CAR Center Automotive Research. Over the course of a year, the group’s planned eight freighters could theoretically bring up to 168,000 electric cars to Europe on three round trips each.
According to state media, China exported 1.2 million cars in 2023 – almost 78 percent more year-on-year. In Germany, according to data from the Federal Motor Transport Authority, the number of newly registered vehicles from China rose by 47.6 percent in 2023 compared to the previous year. In terms of numbers, however, Chinese cars, with 33,699 units, were far behind the competition from other countries. There were also none from China among the top five import brands.
According to Qian, BYD’s international ambitions are clear. “With the increasing transport capacity and the cooperation of local car dealerships, other car manufacturers will clearly feel the pressure from China, not only from BYD, but also from companies like Xiaomi, Nio and Xpeng,” explains the analyst. In Germany, China’s brands still have to shake off their cheap image. However, Qian advises domestic car manufacturers not to ignore Chinese competition. The Chinese are trying to make their cars better known with showrooms in large German cities. Market insiders observe that brands are more likely to focus on vying for the attention of future buyers with showrooms like Tesla’s rather than retreating to industrial areas.
Bremerhaven is not yet seeing a “flood of cars” from China
The fact that the ships mostly head for Europe is also due to the ports. According to expert Cui, these can accept car freighters differently than those in Africa or South America. The Ro-Ro ships are new in Bremerhaven, notes BLG Logistics spokeswoman Tina Aller Heiligen. However, the operator of the car terminal in the northern German city does not see the large flood of Chinese cars. In 2023, 1.7 million cars were handled there, 10,000 of them Chinese.
However, the company is noticing a change: According to All Saints, more cars are now being imported than exported. Is the flood of cars still coming from the Far East? In the first two months of this year, China delivered around 75,600 electric cars to the EU – a decline of around a fifth compared to the same period last year, according to data from Chinese customs. In addition, the EU’s anti-subsidy investigation into electric car manufacturers producing in China is still simmering in Brussels. Preliminary results are expected in July.
Market in China is highly competitive
The approach is dividing the industry into those companies that support it and others that fear countermeasures from Beijing to their detriment. Punitive tariffs from the EU are possible, which would significantly worsen the trade relationship between Europe and China. Countries like the USA are already blocking Chinese cars from their market by imposing such high tariffs that it is not worthwhile for the Chinese to sell them there. Some observers believe that this will isolate the USA from technological progress. According to some experts, Chinese brands are currently among the most advanced among electric cars.
But it’s not just the Chinese who ship their electric cars. Victor Gao from the state-affiliated Beijing organization Center for China and Globalization points to the US car manufacturer Tesla, which exports abroad from its factory in Shanghai. “The Chinese market is the best and best equipped to produce electric cars,” says Gao. In any case, electric car companies in China are currently fighting bitterly to survive on the market. Margins are low and many are not profitable. “There are currently more than a hundred electric car manufacturers producing in China, but in the end maybe three to five will survive,” says Gao.