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Automotive China is increasingly closer to Europe. Taking advantage of the Beijing Motor Show (25-27 April), many Western and Japanese producers sought opportunities to start collaborations with leading local companies. From German companies, already very present in China, to Toyota and Nissan. The big foreign companies have historically dominated the Dragon’s market since the 1990s, but the balance of power has now been reversed: the overall market share (cars with internal combustion engines plus electric cars) has gone from 57% to 48% between 2021 and 2023. And among electric cars alone the balance is even more shifted in favor of Chinese brands, which dominate the top ten, with BYD (over 30% of the market) clearly in the lead ahead of Tesla.
Among the historic manufacturers, Renault, in particular, has had talks with Li Auto and Xiaomi. The subject of the discussions is electric and intelligent vehicle technologies, declared the Transalpine Group.
The hypothesis is of potential partnerships with the two companies. “Our CEO Luca de Meo has engaged in key conversations with industry leaders, including our partners Geely and Dongfeng, key suppliers, but also new players such as the founders of Li Auto and Xiaomi Technology,” wrote the head of purchasing and partnerships at Renault, François Provost in a post on LinkedIn. Xiaomi has been the big protagonist in recent weeks with its unique and brand new SU7 electric car, which recorded a record number of orders.
The talks at the Beijing Auto Show take place in a context of rather tense relations between Europe and China. For months, the European Commission has launched a series of investigations into the hypothesis that Chinese exports are supported by state subsidies and unfair billions, which would artificially push the accelerator of price competitiveness. Sales of cars produced by Chinese brands are estimated to increase by 1% to 5% of market shares in just three years (2021-2024) by the mid-year AlixPartners Global Outlook, presented this week.
According to the Kiel Institute for the World Economy, Chinese government subsidies to local industries are up to nine times higher than those granted by major EU and OECD countries, such as the United States or Germany. Among the biggest beneficiaries of Chinese state incentives would be the leader of electric cars (battery and plug-in hybrid), BYD, which in 2022 alone would have received around 2.1 billion euros from the Beijing government. State aid went from 220 million in 2020 to 2.1 billion two years later, according to the study published on April 10 by the German institute. China obviously rejects these theses and these data, and actually accuses Europe of protectionism.