The first half of 2024 has highlighted a growing divergence in the sales trajectory of electric and plug-in hybrid vehicles between China and Europe.
While Europe is experiencing stagnation, with these vehicles accounting for only 20.5% of sales in June (a decrease compared to last year), China is witnessing a flourishing growth.
In July, their market share in China surpassed 50%, compared to 36% in the same period last year, figures unmatched by other major global markets.
Strategic Differences
“Dominated by Western manufacturers in the internal combustion engine vehicle market, the Chinese wanted to be dominant in the electric vehicle market.
This is evident month after month,” says economist Bernard Jullien, a lecturer at the University of Bordeaux.
Unlike European manufacturers, many Chinese manufacturers were born at the same time as the electric car.
“For them, electric is not a burden that must be carried for regulatory reasons” but “the result of a whole arsenal of measures put in place by the Chinese government,” explains Tommaso Pardi, a researcher at the CNRS.
Meanwhile, “Western manufacturers have to arbitrate between their internal combustion engine production, which remains profitable, and the development of their electric production, which is not yet,” summarizes the researcher.
China’s Maturity
In 2023, China already accounted for 60% of new electric vehicle registrations worldwide, according to the International Energy Agency (IEA).
In its strategy, China has established a powerful electric battery industry, like its giant BYD, which supplies Tesla, BMW, and Audi.
“The access of Chinese manufacturers to these batteries at much lower prices than Western manufacturers significantly reduces vehicle costs,” explains Tommaso Pardi.
This advantage has allowed Chinese manufacturers to “attack the market from the bottom,” that is, “with inexpensive vehicles designed for urban configurations,” emphasizes Bernard Jullien.
The IEA estimated in April that 65% of electric vehicles sold in China were now cheaper than their internal combustion engine equivalents.
Europe’s Price Barrier
Conversely, in Europe, the price of electric vehicles remains high, and their sales are correlated with the presence of subsidies or purchase incentives.
In July, Germany experienced a 36.8% drop in sales of 100% electric models year-on-year, the sixth consecutive decline since the government’s decision to stop the purchase aid program.
In China, generous purchase subsidies have certainly allowed sales to take off.
But today, the Chinese market seems to have reached a form of maturity. “Demand is finding a supply that suits it very well.
It is a market that is no longer completely subsidized and artificial; it is becoming a natural market,” assures Tommaso Pardi.
Europe’s Delicate Situation
The European Union, however, “is in a delicate situation,” points out the researcher.
The EU finds itself caught between ecological imperatives – with the future ban on sales of new internal combustion engine vehicles from 2035 – and industrial and economic imperatives, facing a China ready to export its fleet of vehicles.
Tariff Reprieve
To buy itself time, Brussels announced in July up to 38% additional provisional customs duties on imports of Chinese electric vehicles.
In response, China has appealed to the World Trade Organization (WTO) to challenge these measures.
The European Union “has reacted relatively quickly and firmly,” welcomes Bernard Jullien.
“This will give some respite to European brands, which will be able to occupy the field,” estimates the economist, who notes an “increasingly complete catalog among European manufacturers,” with, for example, the arrival on the market of new models under 25,000 euros like the Renault 5 or the ë-C3 from Citroën.
According to him, the measures taken by France before Brussels at the end of 2023 – the end of the ecological bonus for vehicles with too high a carbon footprint – have made it possible to “very considerably reduce” the registration of Chinese electric vehicles in France.
But to achieve this in a sustainable way, “it is absolutely necessary to produce smaller, less expensive vehicles,” warns Bernard Jullien.