Reuters
Tue, July 4, 2023
MG Motor Mexico, owned by China's SAIC Motor, launches an electric vehicle
SHANGHAI/BEIJING (Reuters) - China's SAIC Motor is working on the site selection to build a plant in Europe to produce electric vehicles, the company said on Tuesday, as it presses ahead with it expansion in the region.
The Chinese partner of Volkswagen and General Motors, which did not give further details on the plant plans, said it had sold 530,000 units overseas in the first quarter, an increase of 40% from a year earlier. Nearly 70% of those sales came from its MG brand. Sales of MG cars in Europe more than doubled to 115,000 units in the first half, SAIC added.
The state-owned Chinese automaker estimated its overseas sales could exceed 1.2 million units in 2023. It plans to launch more than 10 new models under the MG brand in the next 18 months globally.
Automakers including Tesla, BMW and BYD are ramping up efforts to export China-made vehicles to other markets as auto demand weakened at home, taking advantage of the lower manufacturing and supply chain costs in China.
SAIC was the biggest exporter among all Chinese automakers in the first five months, according to data from China Passenger Car Association. Britain, Mexico, Australia and India were among its largest overseas markets, the data showed.
(Reporting by Zhang Yan, Brenda Goh and Beijing Newsroom; Editing by Muralikumar Anantharaman and Louise Heavens)
China Takes the Trade Fight to Europe, Targeting the Green Transition
Ewa Krukowska, Bryce Baschuk and Richard Bravo
Tue, July 4, 2023
China Takes the Trade Fight to Europe, Targeting the Green Transition
(Bloomberg) -- China’s decision to restrict critical mineral exports will hit key sectors in the European Union’s effort to decarbonize its economy, and demonstrates the limits of western aspirations to shift supply chains beyond the reach of policymakers in Beijing.
China is the largest global producer of the two minerals, gallium and germanium, which will be subject to export restrictions next month and that are crucial to the semiconductor, telecommunications and electric-vehicle industries. The EU gets 71% of its gallium from China and 45% of its germanium.
The move comes weeks after the EU unveiled a new economic security strategy, which seeks oversight of critical technology exports and may curb outbound investments in the name of national security. The proposal is part of a growing push within the bloc to strengthen security tools as countries such as China and Russia increasingly use trade and the control of critical supply lines to advance political and even military goals.
“China’s action is a stark reminder of who has the upper hand in this game,” Simone Tagliapietra, a researcher at the Bruegel think-tank in Brussels, said in an interview. “The harsh reality is that the west will need at least a decade to de-risk from China’s minerals supply chains, so this really is an asymmetric dependency.”
The EU was taught a difficult lesson when Russia invaded Ukraine last year, triggering surging inflation and fears that entire industries might collapse as the bloc rushed to source new supplies of oil and gas. The bloc’s member states were torn over how to respond to Moscow, with some countries overly reliant on cheap Russian crude and gas.
The same dynamic is also playing out with the EU’s policy on China, with certain nations unwilling to put their trade relationship with the world’s second-largest economy at risk.
Reacting to China’s announcement, German Economy Minister Robert Habeck said the government in Berlin must “learn the lesson from recent years in terms of what a certain sovereignty in production, energy and economic security really means.”
“You probably saw today that China is really starting to up the ante regarding two types of metal,” Habeck said at a chemicals industry lobby conference. “If that happens with lithium or something similar then we really have a different kind of problem,” he warned.
China’s $6.8 trillion consumer marketplace is a critical destination for European exports of cars, pharmaceuticals and machinery. German automakers Volkswagen AG, Mercedes-Benz AG and Bayerische Motoren Werke AG have built dozens of factories in China and all three manufacturers now sell more vehicles in China than any other market.
The US has pushed for Europe to take a tough line with Beijing, and European Commission President Ursula von der Leyen has argued that the bloc needs to “de-risk” from China, but short of a full-blown “decoupling.”
The EU launched its Critical Raw Materials Act in March to ease financing and permitting for new mining and refining projects and strike trade alliances to reduce the bloc’s dependence on Chinese suppliers. The US and Europe have also been looking to set up a “buyers’ club” to strike supply deals and investment partnerships with producing nations.
“We have seen a very deliberate hardening of China’s overall strategic posture for some time and it has now been matched by a ratcheting up of increasingly assertive actions,” von der Leyen said in a policy speech earlier this year. “Just as China has been ramping up its military posture, it has also ramped up its policies of disinformation and economic and trade coercion.”
And member states have been taking even stronger measures. The Dutch government announced last week measures that will prevent ASML Holding NV — a company with a near-monopoly on the machines needed to make the most advanced semiconductors — from selling some of its equipment to China.
WTO Complaint
The commission, the EU’s executive arm, could confront China’s new export restrictions via dispute settlement proceedings at the Geneva-based World Trade Organization.
However, such a dispute could take years to wind its way through the WTO’s partially dysfunctional dispute settlement body. Furthermore, China’s claim that the measures are necessary for national security could trigger a WTO loophole that allows governments to take “any action which it considers necessary for the protection of its essential security interests.”
But more immediate for the EU, an escalation of tensions could threaten the bloc’s ability to transform its economy to become more environmentally friendly.
The Chinese move comes as the EU is embarking upon an unprecedented overhaul to eliminate carbon emissions across its entire economy, from energy production to agriculture and transport. The Green Deal, whose target is to make the region climate-neutral by 2050, will require access to massive amounts of critical materials used in everything from solar panels to electric vehicles.
“Europe today largely depends on China for a set of clean technologies and critical components, so an escalation of these tensions might make Europe’s green transition more bumpy for sure,” Tagliapietra said.
--With assistance from Alberto Nardelli and Kamil Kowalcze.
Ewa Krukowska, Bryce Baschuk and Richard Bravo
Tue, July 4, 2023
China Takes the Trade Fight to Europe, Targeting the Green Transition
(Bloomberg) -- China’s decision to restrict critical mineral exports will hit key sectors in the European Union’s effort to decarbonize its economy, and demonstrates the limits of western aspirations to shift supply chains beyond the reach of policymakers in Beijing.
China is the largest global producer of the two minerals, gallium and germanium, which will be subject to export restrictions next month and that are crucial to the semiconductor, telecommunications and electric-vehicle industries. The EU gets 71% of its gallium from China and 45% of its germanium.
The move comes weeks after the EU unveiled a new economic security strategy, which seeks oversight of critical technology exports and may curb outbound investments in the name of national security. The proposal is part of a growing push within the bloc to strengthen security tools as countries such as China and Russia increasingly use trade and the control of critical supply lines to advance political and even military goals.
“China’s action is a stark reminder of who has the upper hand in this game,” Simone Tagliapietra, a researcher at the Bruegel think-tank in Brussels, said in an interview. “The harsh reality is that the west will need at least a decade to de-risk from China’s minerals supply chains, so this really is an asymmetric dependency.”
The EU was taught a difficult lesson when Russia invaded Ukraine last year, triggering surging inflation and fears that entire industries might collapse as the bloc rushed to source new supplies of oil and gas. The bloc’s member states were torn over how to respond to Moscow, with some countries overly reliant on cheap Russian crude and gas.
The same dynamic is also playing out with the EU’s policy on China, with certain nations unwilling to put their trade relationship with the world’s second-largest economy at risk.
Reacting to China’s announcement, German Economy Minister Robert Habeck said the government in Berlin must “learn the lesson from recent years in terms of what a certain sovereignty in production, energy and economic security really means.”
“You probably saw today that China is really starting to up the ante regarding two types of metal,” Habeck said at a chemicals industry lobby conference. “If that happens with lithium or something similar then we really have a different kind of problem,” he warned.
China’s $6.8 trillion consumer marketplace is a critical destination for European exports of cars, pharmaceuticals and machinery. German automakers Volkswagen AG, Mercedes-Benz AG and Bayerische Motoren Werke AG have built dozens of factories in China and all three manufacturers now sell more vehicles in China than any other market.
The US has pushed for Europe to take a tough line with Beijing, and European Commission President Ursula von der Leyen has argued that the bloc needs to “de-risk” from China, but short of a full-blown “decoupling.”
The EU launched its Critical Raw Materials Act in March to ease financing and permitting for new mining and refining projects and strike trade alliances to reduce the bloc’s dependence on Chinese suppliers. The US and Europe have also been looking to set up a “buyers’ club” to strike supply deals and investment partnerships with producing nations.
“We have seen a very deliberate hardening of China’s overall strategic posture for some time and it has now been matched by a ratcheting up of increasingly assertive actions,” von der Leyen said in a policy speech earlier this year. “Just as China has been ramping up its military posture, it has also ramped up its policies of disinformation and economic and trade coercion.”
And member states have been taking even stronger measures. The Dutch government announced last week measures that will prevent ASML Holding NV — a company with a near-monopoly on the machines needed to make the most advanced semiconductors — from selling some of its equipment to China.
WTO Complaint
The commission, the EU’s executive arm, could confront China’s new export restrictions via dispute settlement proceedings at the Geneva-based World Trade Organization.
However, such a dispute could take years to wind its way through the WTO’s partially dysfunctional dispute settlement body. Furthermore, China’s claim that the measures are necessary for national security could trigger a WTO loophole that allows governments to take “any action which it considers necessary for the protection of its essential security interests.”
But more immediate for the EU, an escalation of tensions could threaten the bloc’s ability to transform its economy to become more environmentally friendly.
The Chinese move comes as the EU is embarking upon an unprecedented overhaul to eliminate carbon emissions across its entire economy, from energy production to agriculture and transport. The Green Deal, whose target is to make the region climate-neutral by 2050, will require access to massive amounts of critical materials used in everything from solar panels to electric vehicles.
“Europe today largely depends on China for a set of clean technologies and critical components, so an escalation of these tensions might make Europe’s green transition more bumpy for sure,” Tagliapietra said.
--With assistance from Alberto Nardelli and Kamil Kowalcze.
Chinese EVs have yet to succeed in Europe. The Middle East could be different
Rita Liao
Tue, July 4, 2023
For Chinese electric car manufacturers, Europe has long been a priority destination for international expansion. With its affluence, environmental consciousness, and relatively friendly attitude towards China, the continent has attracted established players like BYD as well as emerging brands like Nio and Xpeng.
Despite their ambitious plans, Chinese EV makers yet to achieve the level of success they had hoped for in Europe. In 2022, BYD held a mere 0.3% market share across 14 major European markets, while Xpeng and Nio, which both entered Europe in 2021, each accounted for 0.1% of the region, according to auto data tracking site EU-EVs. Western carmakers continue to dominate the market, with Tesla enjoying a 15% share, Volkswagen with 11.3%, and BMW with 6.2%.
It's too soon to say if China's ambitious EV makers will ever establish a strong foothold in Europe, but the early tepid performance is driving them to hedge their bets. They are setting their sights on a region halfway between Europe and China -- the Middle East.
As countries around the world accelerate efforts to phase out fossil fuels, the oil-rich countries in the Middle East are also joining the fray to electrify the auto industry. In a controversial move, the United Arab Emirates, a country known for its abundant oil reserves, will host the 2023 United Nations-sponsored climate talks, more commonly known as COP28.
"Oil is relatively cheap [in the Gulf countries] but can be exported for a big profit margin. The money made from export can then go towards subsidizing the domestic EV industry," Emma Meng, an auto influencer with over one million followers on Weibo who is also an EV consultant based mostly in the UAE, explained in an interview with TechCrunch.
Chinese electric vehicle manufacturers are taking note of these developments. The Middle East, with an EV market that is still nascent, offers a wealth of potential for growth. But the same challenges that Chinese EV makers have faced in Europe will arise once again in this land of opportunities.
Pushed to go beyond China
China's EV makers feel an increasing urgency to expand overseas as consumer demand weakens amid an economic slowdown and Tesla's aggressive price cuts heighten domestic competition.
The price war started by the American titan has triggered some 40 Chinese EV brands to slash prices. Even Nio, which prides itself on its premium brand image and pledged not to join the price war, gave in eventually.
"The Chinese market is too cut-throat. EV makers have no choice but to get out," suggested Meng.
The momentum in Europe is driving Chinese EV makers to look elsewhere. Meanwhile, the increasing level of government-level interactions between China and the Middle East is offering reassurance for automakers to invest in the region.
In early December, President Xi Jinping traveled to Saudi Arabia, marking one of his first trips abroad since China closed its borders to control the COVID-19 pandemic. His meeting with Crown Prince Mohammed bin Salman was widely viewed as China's attempt to assert more influence in the region. In June, Saudi Arabia signed a historic $5.6 billion oil deal with China, further solidifying the economic ties between the two countries.
Almost all major Chinese EV makers have now developed plans for expansion into the Middle East, according to Meng. For carmakers already present in Europe, the region represents a natural next step as their European Union homologation makes it much easier for the companies to obtain certification for the Middle East. The Middle East also serves as a nice springboard for expansion into North Africa, which shares similarities in terms of religion, language, and climate, with vast desert landscapes and sparse rainfall, Meng suggested.
Win-win partnership
Having Chinese EVs in the Middle East could potentially create a mutually beneficial situation. To establish the necessary network to power EVs, the oil-rich nations need to seek external know-how. It come down to two options.
"There are only two types of EV companies in the world: Tesla, or Chinese EV makers," said Meng. China's reputation for infrastructure development makes it an ideal candidate to help build facilities like charging stations.
According to one industry report, demand for EVs in the UAE is projected to grow by an annual rate of 30% between 2022 and 2028, with Dubai alone expected to require 70,000 charging points by 2030.
Meng's consulting firm is one of many Chinese businesses tapping the region's thirst for EV expertise. In a joint venture with Shenzhen Bus Group, it won a bid to assist in the electrification of Abu Dhabi's public transport system through the deployment of electric taxis and buses.
Slowed down by red tape
Despite the eagerness of Chinese manufacturers to enter the Middle East, only BYD has managed to open stores in the region thus far. This slow pace is partly attributed to the challenging process of obtaining the Gulf Cooperation Council (GCC) certification, which is partially needed to demonstrate that the cars can withstand the region's harsh weather conditions.
Timing is crucial for getting the approval to sell in the GCC. As Meng pointed out, there is a brief period during the summer when EVs can be tested to show they could perform well in hot weather. If this window is missed, manufacturers would need to wait another year.
Nio recently scored a significant investment of $738.5 million from the Abu Dhabi government. However, there has been no indication of when the company can begin selling in the country.
Like other governments, the Middle East expects foreign firms to play a role in driving the local economy. But setting up, say, production on the foreign land could undermine Chinese manufacturers' competitiveness -- a complete supply chain and affordable labor at home that lead to lower prices.
Chinese EVs exported to Europe and the Middle East are already considerably more expensive than their domestic prices. BYD's popular ATTO3 (known in China as Yuan Plus) model is priced at roughly twice as much in the UAE as in China mostly due to steep logistics and homologation costs, according to Meng.
Wait times for Chinese EVs are also lengthy. Given the relatively small export volume, manufacturers are still prioritizing their domestic models. Long wait times, coupled with the absence of an established brand reputation and less competitive pricing, undercut Chinese EV cars' appeal to their foreign buyers. The upcoming year will be key to determine if the Chinese carmakers will stand a better chance of success in the region.
Abu Dhabi pours $738.5M into China’s Tesla challenger Nio
Rita Liao
Tue, July 4, 2023
For Chinese electric car manufacturers, Europe has long been a priority destination for international expansion. With its affluence, environmental consciousness, and relatively friendly attitude towards China, the continent has attracted established players like BYD as well as emerging brands like Nio and Xpeng.
Despite their ambitious plans, Chinese EV makers yet to achieve the level of success they had hoped for in Europe. In 2022, BYD held a mere 0.3% market share across 14 major European markets, while Xpeng and Nio, which both entered Europe in 2021, each accounted for 0.1% of the region, according to auto data tracking site EU-EVs. Western carmakers continue to dominate the market, with Tesla enjoying a 15% share, Volkswagen with 11.3%, and BMW with 6.2%.
It's too soon to say if China's ambitious EV makers will ever establish a strong foothold in Europe, but the early tepid performance is driving them to hedge their bets. They are setting their sights on a region halfway between Europe and China -- the Middle East.
As countries around the world accelerate efforts to phase out fossil fuels, the oil-rich countries in the Middle East are also joining the fray to electrify the auto industry. In a controversial move, the United Arab Emirates, a country known for its abundant oil reserves, will host the 2023 United Nations-sponsored climate talks, more commonly known as COP28.
"Oil is relatively cheap [in the Gulf countries] but can be exported for a big profit margin. The money made from export can then go towards subsidizing the domestic EV industry," Emma Meng, an auto influencer with over one million followers on Weibo who is also an EV consultant based mostly in the UAE, explained in an interview with TechCrunch.
Chinese electric vehicle manufacturers are taking note of these developments. The Middle East, with an EV market that is still nascent, offers a wealth of potential for growth. But the same challenges that Chinese EV makers have faced in Europe will arise once again in this land of opportunities.
Pushed to go beyond China
China's EV makers feel an increasing urgency to expand overseas as consumer demand weakens amid an economic slowdown and Tesla's aggressive price cuts heighten domestic competition.
The price war started by the American titan has triggered some 40 Chinese EV brands to slash prices. Even Nio, which prides itself on its premium brand image and pledged not to join the price war, gave in eventually.
"The Chinese market is too cut-throat. EV makers have no choice but to get out," suggested Meng.
The momentum in Europe is driving Chinese EV makers to look elsewhere. Meanwhile, the increasing level of government-level interactions between China and the Middle East is offering reassurance for automakers to invest in the region.
In early December, President Xi Jinping traveled to Saudi Arabia, marking one of his first trips abroad since China closed its borders to control the COVID-19 pandemic. His meeting with Crown Prince Mohammed bin Salman was widely viewed as China's attempt to assert more influence in the region. In June, Saudi Arabia signed a historic $5.6 billion oil deal with China, further solidifying the economic ties between the two countries.
Almost all major Chinese EV makers have now developed plans for expansion into the Middle East, according to Meng. For carmakers already present in Europe, the region represents a natural next step as their European Union homologation makes it much easier for the companies to obtain certification for the Middle East. The Middle East also serves as a nice springboard for expansion into North Africa, which shares similarities in terms of religion, language, and climate, with vast desert landscapes and sparse rainfall, Meng suggested.
Win-win partnership
Having Chinese EVs in the Middle East could potentially create a mutually beneficial situation. To establish the necessary network to power EVs, the oil-rich nations need to seek external know-how. It come down to two options.
"There are only two types of EV companies in the world: Tesla, or Chinese EV makers," said Meng. China's reputation for infrastructure development makes it an ideal candidate to help build facilities like charging stations.
According to one industry report, demand for EVs in the UAE is projected to grow by an annual rate of 30% between 2022 and 2028, with Dubai alone expected to require 70,000 charging points by 2030.
Meng's consulting firm is one of many Chinese businesses tapping the region's thirst for EV expertise. In a joint venture with Shenzhen Bus Group, it won a bid to assist in the electrification of Abu Dhabi's public transport system through the deployment of electric taxis and buses.
Slowed down by red tape
Despite the eagerness of Chinese manufacturers to enter the Middle East, only BYD has managed to open stores in the region thus far. This slow pace is partly attributed to the challenging process of obtaining the Gulf Cooperation Council (GCC) certification, which is partially needed to demonstrate that the cars can withstand the region's harsh weather conditions.
Timing is crucial for getting the approval to sell in the GCC. As Meng pointed out, there is a brief period during the summer when EVs can be tested to show they could perform well in hot weather. If this window is missed, manufacturers would need to wait another year.
Nio recently scored a significant investment of $738.5 million from the Abu Dhabi government. However, there has been no indication of when the company can begin selling in the country.
Like other governments, the Middle East expects foreign firms to play a role in driving the local economy. But setting up, say, production on the foreign land could undermine Chinese manufacturers' competitiveness -- a complete supply chain and affordable labor at home that lead to lower prices.
Chinese EVs exported to Europe and the Middle East are already considerably more expensive than their domestic prices. BYD's popular ATTO3 (known in China as Yuan Plus) model is priced at roughly twice as much in the UAE as in China mostly due to steep logistics and homologation costs, according to Meng.
Wait times for Chinese EVs are also lengthy. Given the relatively small export volume, manufacturers are still prioritizing their domestic models. Long wait times, coupled with the absence of an established brand reputation and less competitive pricing, undercut Chinese EV cars' appeal to their foreign buyers. The upcoming year will be key to determine if the Chinese carmakers will stand a better chance of success in the region.
Abu Dhabi pours $738.5M into China’s Tesla challenger Nio
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