Chinese electric cars "explode", European auto industry like "ants on a hot pan"?

The European auto industry is facing an unprecedented crisis due to the boom in the electric vehicle market in recent years.

The booth of Chinese automaker Xpeng at the 2023 International Motor Show in Munich, Germany, September 2023. (Source: THX)

With the ban on the sale of diesel and petrol cars in the European Union (EU) - expected to come into effect in 2035, aiming to reduce polluting emissions and contribute to achieving green growth goals - the European automotive industry has felt the need to change course by starting the race towards electric vehicles.

However, the electric car market, including production and exports, is dominated by a handful of large companies, mainly Chinese ones. In 2023, these companies accounted for nearly 20% of the European market share, with only Tesla able to compete in terms of sales.

European car companies are traditional carmakers, and the complete switch to electric vehicles, while necessary, is putting them in crisis. Electric vehicles require a steady supply of precious materials such as semiconductors and rare earths, and require high technology and huge investment to develop.

These factors have made the selling price of electric vehicles much higher than that of conventional vehicles, leading to a decrease in overall demand for electric vehicles, especially given the gloomy global economic situation. The oversupply of rare earths has caused great losses for mining and processing companies around the world.

Moreover, Europe's heavy dependence on Beijing for raw materials, coupled with its technological and government support shortcomings compared to China, is putting it at a disadvantage in the electric vehicle race.

In recent days, major European car manufacturers such as Italy's Stellantis and Germany's Volkswagen have announced that they want to start a political campaign to address this issue and demand the necessary investments for the transition, given the business trends in the period 2023-2024.

European governments are exploring ways to support their auto industry during this extremely difficult time, such as the possibility of significant tax breaks for manufacturers. The EU has also announced in July 2024 an increase in tariffs on Chinese electric cars, which will be confirmed in November.

However, the future of the European auto industry, as well as other related industries, remains uncertain at the moment.

Source: https://baoquocte.vn/xe-dien-trung-quoc-bung-no-nganh-o-to-chau-au-nhu-kien-bo-chao-nong-286278.html