Chinese electric cars in Europe: will they be able to compete and will they influence the used car markets? | Business

Lithuanian drivers are not yet familiar with the models of Chinese manufacturers and generally view them with skepticism, which is why their number on the country’s roads is slow.

According to Mats Buzelis, communications manager of the car data company carVertical, the growth of the market share of Chinese electric cars in Europe may also affect the used car market. However, the expert assures that the path of Chinese manufacturers to the heights of the market will not be paved with roses.

Doubts about rapid market share growth

Since electric cars are still more expensive than diesel and gasoline vehicles, cheap Chinese electric cars can be a viable alternative. According to the “Financial Times”, the market share of Chinese electric cars in the countries of the European Union reached 8% in 2023. It is predicted that by 2027 they will occupy a fifth of the market, although even today such ambitions already seem too optimistic.

However, price is not the only factor that makes drivers hesitant to abandon cars with internal combustion engines. The charging infrastructure in most countries still doesn’t meet the needs of drivers, so it seems like a huge inconvenience to most potential buyers who don’t even have the opportunity to install their own charging station.

“Those who most needed an electric car probably already have one – a significant part of the market is already filled with electric cars and there is no longer as much room for growth as there was ten years ago. For the greater majority of drivers, this is still a distant reality due to the inconvenience and poor adaptability of the infrastructure in densely populated areas. Not only that, in the industry we also see the actions of manufacturers who doubted the future of electric cars – they redistribute their investments, no longer writing off internal combustion engines as technology that no longer pays off or has no future,” says M. Buzelis.

It will not allow the water to be easily muddied

Cars from Chinese manufacturers are currently attracting buyers with exceptional prices, but according to an expert, the boom in cheap Chinese electric cars will not last long.

“What we are seeing now are the terms of entry into the market. Aggressive pricing offered by the Chinese is now helping to market their products. However, this cannot continue for long, because Europe should soon apply increased customs duties on cars made in China,” says the communications manager of carVertical.

The aim of the European Commission, according to M. Buzelis, is to unify the rules according to which electric cars are manufactured. The Chinese will only be allowed to compete when they produce vehicles on a level playing field – without exploiting unfair labor, resource extraction and subsidizing their own electric car market in Europe. Otherwise, 38.1 percent will be applied in Europe. duty rate on new Chinese electric cars. Only after building their factories on the continent, they will be able to try to compete with European manufacturers.

Used cars can get cheaper, but the probability is low

It is already known about the ambitions of some Chinese manufacturers to build their assembly plants in Europe. By building them and aggressively competing in the old continent, the Chinese could compete for a larger share of the electric car market, which would be a kind of tribute to end users.

“If the demand for used European or other traditional electric cars decreased due to new players from China appearing on the market, it is likely that this would also cool down the used car market a little.” Some drivers would choose new cheap electric cars instead of used vehicles that are several years old. However, the further we go, the more such a scenario is doubted due to the strict tone of the European Commission addressed to Chinese manufacturers”, says M. Buzelis.

Buyers of Chinese electric cars should also consider their possible depreciation, although there is little information on this so far. Such cars may be less in demand in the secondary market, which would greatly affect their desirability.

“Rapid depreciation has a big impact on monthly lease payments. In the first few years, Chinese electric cars may lose a very significant part of their value, so it will be difficult for Chinese cars to gain traction in the used car market”, M. Buzelis shares his insights.