Lhe competitiveness of electric vehicles made in China threatens German manufacturers. The dynamics of the electric car market in China, i.e. 25% of vehicles sold in this country in 2022, compared to less than 5% in 2019, are cutting into the juicy market shares of brands from across the Rhine.
BMW, Mercedes or Volkswagen, two of whose three CEOs accompanied the Chancellor, Olaf Scholz, during his brief visit to China on November 4, represented in 2021 one in five new cars sold in China, but only 5% of electric cars (“In the driver’s seat: China’s electric vehicle makers target Europe », Mercator Institute for Chinese Studies (Merics), François Chimits and Gregor Sebastian, September 2022).
Behind these big brands, which make around 20% of their global profits in China, a whole network of suppliers and all the related jobs could be damaged in Germany, but also in Romania, the Czech Republic, or Hungary, where the automotive industry accounts for more than 10% of jobs.
Rare metals for sale
After a decade of effort, Chinese production indeed dominates most of the components of an electric car, from rare metals and their refining, to batteries, assembly and the sale of these vehicles. To make matters worse, this rise in power was made possible by a skilful combination of mercantilist policies, combining discrimination against foreign productions through purchase bonuses or access to the market, massive subsidies and constraints in access to essential minerals produced in China.
Faced with this challenge, German manufacturers seem paradoxically to be doubling their investments in China, at the risk of a new dependency. In recent years, Beijing has indeed begun to encourage the establishment of foreign manufacturers on its soil. Behind the objective of upgrading its sector, the Chinese authorities barely conceal that of making their partners even more dependent.
German manufacturers have not been asked to do so, to the point of representing more than 70% of German investments in China since 2020, and 40% of all European investments. More recently, they have multiplied partnerships and research and development (R&D) centers in China. France is not to be outdone, with the exclusive production in China of the Dacia Spring electric SUV.
If these strategies of private companies can, taken individually, be judicious to spare their economic interests, they risk to misalign even more the interests of the manufacturers of those of Europe as a whole. However, the economic benefits of a presence in the Chinese electric vehicle market should not be overlooked, both for short-term sales prospects and for long-term global competitiveness, given the vitality of this sector in China. . Chinese domination over the entire sector would make a sudden decoupling less than optimal.
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