European nations compete for Chinese EV factories

FE Team | Published: June 10, 2024 23:57:39

LONDON, June 10 (Reuters): European governments may be wary of budget Chinese electric vehicles flooding their markets but they're also fiercely competing for a share of the manufacturing investment and jobs the new competitors bring.
While the European Union investigates China's auto subsidies and considers tariffs on imports, national governments across the bloc are dangling their own incentives to attract Chinese automakers looking to build European factories.
Manufacturing costs for Chinese EV makers including BYD, Chery Automobile and state-owned SAIC Motor are much lower at home but they are nonetheless keen to set up in Europe to build their brands and save on shipping and potential tariffs, said Gianluca Di Loreto, a partner at consultancy firm Bain & Company.
"Chinese automakers know their cars must be perceived as European if they want to bear interest among European customers," he said. "This means producing in Europe."
The EU tariff decision is expected this week. On one hand, import taxes could help European automakers better compete with their Chinese counterparts, but they may also spur on Chinese automakers which are already investing heavily, and for the long-term, in Europe.
Sales of Chinese-brand cars comprised 4 per cent of the European market last year and are forecast to hit 7 per cent by 2028, according to consulting firm AlixPartners.
Hungary, which produced around 500,000 vehicles in 2023, secured the first European-factory investment by a Chinese automaker, announced last year by EV giant BYD which is also considering a second European plant in 2025.
Budapest is also negotiating with Great Wall Motor for its first European plant, local media have reported, with the country offering cash for jobs creation, tax breaks and relaxed regulation in targeted zones to attract foreign investment.
Hungary has spent more than $1 billion in recent years to support new battery plants of South Korean groups SK On and Samsung SDI and Chinese battery giant CATL's planned factory.