A report authored by Fitch Solutions suggests that electric vehicle makers from China have set their eyes on the European mass market and could make significant inroads next year, followed by an even bigger onslaught in the years to come.
The report says that the Chinese automakers are likely to find a harder time breaking into the premium EV market, but that goal isn’t an altogether impossible one once the vehicle makers establish themselves in the mass market segment of the industry. This is because premium market buyers who are used to cruising around in Audis, BMWs, Porsche or Mercedes Benz are unlikely to easily take to brands such as BYD, Xpeng or NIO.
The report indicates that at the moment, Chinese-made EVs have a 5% share of the market in Europe. This could bump up to 15% by 2025. The major brands in Europe lean more toward the upper-tier EVs due to the stringent emissions controls in their jurisdictions and the fact that the premium segment offers better profit margins than the mid-market electric vehicles. This bias is exactly what the Chinese manufacturers are looking to exploit, Fitch Solutions says.
The report poses one major question that electric vehicles from China and their manufacturers will come up against as they enter Europe: How will the motoring public respond to their offerings? This same question arose in the past when Chinese automakers tried to penetrate the European market with their internal combustion engine vehicles. The vehicles fell flat due to a myriad of quality concerns. However, the Chinese seem to have learned from that experience and are apparently better prepared this time round.
A clue as to how the Chinese are likely to woo doubtful EU clients can be seen in the way Korean brands Kia and Hyundai seduced buyers in Europe with record-setting guarantees to reduce doubts about quality. Two decades later, these brands have performed consistently well on matters of style and quality in the eyes of European customers. The Chinese are likely to follow this approach too.
Another possible hurdle is likely to be a political one. The Chinese don’t have a good reputation for observing human rights, and the news about demonstrations against harsh lockdown measures isn’t doing their PR any good. How they navigate these hurdles could make or break their entry into Europe, giving automakers such as Mullen Automotive Inc. (NASDAQ: MULN) more space to gain a foothold and establish themselves in that market.
NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN
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