Chinese electric vehicle makers looking to expand to markets in Europe need a localization strategy for the culturally diverse region, although adapting to the various demands of each country could put a strain on their finances, according to an industry expert.
“Europe, like Southeast Asia, is very diverse, and therefore a marketing strategy in Germany might not work in France and Italy. The complexity ramps up significantly for EV makers and that could be a drain on their capital,” said Tu T. Le, founder and managing director of business intelligence firm Sino Auto Insights, on Oct. 29 during the TechNode Emerge 2020 conference.
Chinese carmakers have long sought to expand overseas amid Beijing’s ambition to build a world-class auto industry, and the aspiration has now been passed to young EV makers.
Nio is stepping up its global expansion with plans to begin selling in some European countries in the second half of 2021, according to a Reuters report. A Chinese media outlet reported last week that it aims to open its first overseas showroom in Copenhagen, Denmark and sell 7,000 SUVs within the next two years. Nio declined to comment when contacted by TechNode on Thursday.
Meanwhile, Alibaba-backed Xpeng Motors beat its rivals to the punch with a late-September shipment of 100 crossovers to Norway which were scheduled for delivery in partnership with a local dealer starting this month.
With deliveries of several thousand units per month, Chinese EV makers have yet to carve out a prominent position among traditional automaker giants in their home markets. Flush from US market listings and investments from local Chinese governments, the companies are looking to establish footholds in Europe, a market where even Tesla has faced tough competition.
The California-based carmaker is losing ground with its EV market share falling sharply to 13.5% in Western Europe in the third quarter from 33.8% in the same period a year ago, industry analyst Matthias Schmidt said in a report earlier this week. Meanwhile, local giants Renault and Volkswagen, the two largest EV makers in the region, grabbed market share from Tesla in the first three quarters of the year.
While investor sentiment sends Chinese EV stocks higher, the companies have a long road ahead to succeed in such a market. In an interview in June, Nio president Qin Lihong acknowledged the barrier for entry to Europe is high and its current approach to build a sales network in China may not apply in the West.
“Chinese EV makers really need to focus on individual European countries as opposed to looking at Europe as one big market. Moving forward, what they do with new funding and where they invest could be an important indicator of how successful they’re going to be,” Le said.