Shulou(Shulou.com)11/24 Report--

With the electrification of the car industry and the rise of Chinese electric car companies, a number of chief executives of European carmakers recently admitted that these established car companies are losing their competitive edge, according to news on September 5.

For decades, Europe has established a dominant position in the automotive field by making high-quality internal combustion engine cars. But that competitive advantage is being cut as demand for electric vehicles grows and Chinese companies are able to produce batteries at lower costs.

Christophe P é rillat, chief executive of French auto parts maker Valeo at Tuyuan Pexels, said China is now the company's main market because previous "barriers to entry" for diesel locomotives have been removed. This has enabled Chinese new energy car companies not only to emerge at home, but also to become potential car exporters.

The trend poses a real threat to European car giants such as Volkswagen, Renault and BMW, which want to increase their sales of electric and hybrid vehicles without government subsidies.

Luca De Meo, Renault's chief executive, told the IAA mobile conference in Munich that the company would continue to invest more in new technologies, battery plants and superfactories and hoped its new all-electric vehicle division, Ampere, would allow it to compete in an emerging market that was very different from the traditional one.

De Meo added: "We have high hopes for Ampere to cut costs by 40% in each iteration, which involves significant investment in technology, development and manufacturing technology. We think we have reason and confidence to do this, but it will take some time because Chinese auto equipment manufacturers started earlier. In addition, the market environment in China is also different. So this is a battle and we are ready to participate in it. "

Oliver Blume, chief executive of Volkswagen, also acknowledged the challenge from Chinese car companies. He said the company had developed a new China strategy this year, focusing on developing technologies that specifically meet the needs of Chinese consumers. The German giant also founded Cariad, an automotive software company, and partnered with Chinese electric car startup Xiaopeng, joint venture partner SAIC and self-driving company Horizon Robotics.

"Competition can also help upgrade our own technology," Bloom said. "China is one of our important markets, and we will continue to invest heavily there. Volkswagen has developed a huge cost plan and sees a huge opportunity to expand electric vehicle production while reducing battery production costs by 50%."

Bloom added: "on the one hand, we have a lot of experience in driving cars." Volkswagen has high quality standards, we focus on design, we have many great brands, compared with new competitors, these are great advantages. But on the other hand, we have to accelerate the pace of electrification, digitization and connectivity, so we are developing our own platform and combining it with other collaborative platforms, so I think we are in a good position. But in the final analysis, the most important thing is speed, so Volkswagen made the right decision. "

Metal researchers at the CRU Group say China has been building battery factories at an amazing rate over the past decade and is still adding capacity.

"Battery factories rely heavily on electricity costs, which will be the biggest cost driver if you make batteries, and that's where Europe still needs to catch up," said Klaus Zelmer, chief executive of Skoda, a Volkswagen brand. "our electricity prices are too high compared to China or North America."

The President of the United States signed the inflation reduction Act (Inflation Reduction Act), which allocated $370 billion for climate and clean energy investment, significantly expanded tax credits and other incentives for clean car manufacturing, while supporting domestic electric vehicle supply chain construction.

At present, while European companies also have access to various subsidies and incentives, Mr Zelmer said they were "still a far cry from the US or China" and that policymakers were "not moving fast enough" to keep up.

Mr Zelmer points out that Volkswagen has also created its own battery company, PowerCo, and plans to build a super factory in Canada to help boost capacity at existing plants in Spain and Germany. "I think we are in a good position in terms of supply, but Europe is not doing well enough to expand the size of superfactories," he added. "

While companies such as Renault and Volkswagen have traditionally focused on mass production of mid-range cars, they seem wary of threats from Chinese competitors. However, these luxury carmakers seem confident in their ability to maintain their value proposition.

Michael Steiner, head of research and development at Porsche, the German luxury carmaker, said the company was focusing on building high-quality components to distinguish it from its Chinese competitors.

"Chinese carmakers are our strongest competitors and are making rapid progress in battery technology research and development," Steiner said. "for Porsche, we are looking for better batteries with higher energy density. We have our own subsidiary, Cellforce Group, where we are developing and producing batteries for high-performance cars that are better than the mainstream batteries you can buy now."

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