You had to be at number 7e China International Import Expo (CIIE) in Shanghai if you wanted to get acquainted with the latest trends in the automotive sector. Of the six exhibition spaces, the one dedicated to automobiles was particularly popular, with recent cutting-edge technologies and new models, notably electric vehicles (EVs). German automakers such as BMW, VW and Mercedes Benz have competed to attract consumer interest with models developed specifically for the Chinese market, for which high-tech and efficiency are the watchwords.
EVs are currently at the center of economic tensions between China and the European Union (EU). For Ferdinand Dudenhöffer, a German expert who was for a long time director of the CAR-Center Automotive Research in Duisburg, then founded a new company, Ferdi Research GmbH, based in Bochum (Germany), Chinese car manufacturers are already ahead of their German competitors. in many areas. He is not in favor of countervailing duties imposed by the European Commission on Chinese EVs. As he explains to China todaythis only harms the EU.
China today : What is China’s market share for EVs in the world?
Ferdinand Dudenhöffer: For several decades, China has very systematically developed know-how in the field of lithium-ion batteries. CATL is now the largest battery manufacturer in the world. This means that China is the most cost competitive. The balance therefore tips in favor of Chinese companies. With batteries accounting for up to 40% of the cost of an EV, Chinese manufacturers have a clear cost and price advantage. Europe missed this development because we we are not very visionary. China, for its part, has acquired a natural competitive advantage over the decades. South Korea once dominated the battery sector, but now China takes center stage.
So competition has intensified for German companies?
That’s correct. However, German car manufacturers can also benefit from China’s natural competitive advantages if they work with Chinese companies, for example in the field of batteries. The global automobile market is vast and offers space for German and Chinese manufacturers. But for this, we need the Chinese and not decoupling, as the European Commission seems to want.
What do you think are currently the biggest differences between Chinese and German car manufacturers?
Surveys of Chinese customers show very interesting results. To summarize, young Chinese consumers prefer to buy domestic products. For them, Porsche, BMW, Mercedes and Audi are the cars of their parents’ generation. China’s youth want modern EVs with smart interiors and autonomous driving features. And they are developed in China by Xiaomi, Nio, Xpeng and Chery among others.
And this poses a challenge for German car manufacturers?
Exactly. While Tesla and Chinese automakers such as BYD, Chery, Geely, Li-Auto, Nio, Xiaomi and XPeng are expanding thanks to new technologies, sales of German automakers are collapsing at record speed. The value of the almost sacred brands of German car manufacturers is melting like snow in the sun in China.
In which areas are German manufacturers particularly behind?
Production processes such as integrated die-casting technology, which significantly reduces production costs, are not on the agenda for German car manufacturers. But the Chinese love it. With the concept of “software-designed vehicle” (SDV), Chinese technology giants, such as Huawei, Baidu and Tencent, are working closely with the domestic automobile industry and taking automobiles to a new level. In China, there is an excellent digital infrastructure for the car of the future, while in Germany, efforts are being made to fill the gray areas. We are increasingly cornered due to enormous cost disadvantages and slowness in German locations.
So this means a change of direction for German car manufacturers?
That’s right, and quickly. The results of the coming quarters will hardly be different from the current poor results. A realignment also has a lot to do with learning from Tesla and China. You can’t do that in Germany. To do this, you have to go to China for vehicle development.
At the end of October, the European Commission decided to impose countervailing duties for five years on Chinese EVs. What do you think?
Like many in the automotive sector, I also say that customs duties are a disaster! The European Commission is harming Germany, the German automotive sector and our good cooperation with Chinese companies. The rights themselves hardly seem based in fact. They seem to be very arbitrary, rather a political action supported by France. Now that Donald Trump has won the presidential election in the United States, Germany needs to maintain good relations with China. Because Trump is going to “harass” Germany and the German auto sector. The European Commission is taking action against Germany with its countervailing duties. If you ask me, I say it’s a shame. The European Commission is harming its own automotive sector with its actions, which is incomprehensible.
And how will this decision affect manufacturers and customers? What impact will countervailing duties have on Chinese EVs?
Prices of EVs from China will artificially increase. That means fewer people will buy them and climate change won’t slow down. At the same time, opportunities to expand battery production in Europe are dwindling as the EV market shrinks. If no EVs are sold, there will be no need for battery factories, subsidized by billions of dollars from Brussels and taxpayers. In addition, our car manufacturers are currently having difficulty selling their electric models in China. We would definitely have a chance for our battery sector if we sold more EVs in our home market, Germany. The request world of German EVs would then increase considerably. In short, our automotive sector does not benefit from the economies of scale that would be necessary to be competitive, as in China. Countervailing duties not only have a negative effect in the short term, but also harm the future of the German automotive sector. Brussels is causing damage to the European automotive sector in the long term.
