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The Battle of the Decade


3 November 2021

It’s the main battle of the decade : all manufacturers are betting that Tech giants are boosting the EV industry electric vehicles will eventually replace heat engine. The main concern: batteries s, so who will win the race? China has recently seen a big push towards electric vehicles. The main driver being political will, quotas and subsidies have been put in place and charging infrastructures have been installed everywhere. The target is clear and ambitious: Beijing wants to increase EV sales shares from 8% to 50% by 2035.

Secondary concern : trade wars and regulation

And the market is showing preference for local competitive products; even though a quarter of Tesla’s production pours into this 1.4 billion consumer market, it was dethroned by a mini four-seater EV from Wuling Hongguang priced at USD4000. China seems unstoppable. National quotas making the sale of 25% of electricity compulsory from 2025 should push national manufacturers to invest in this area.

The Chinese tech giants are competing for a place in this competitive sector, with Xiaomi, Huawei, Alibaba and DJI already involved since last year in the local electric car market, which happens to be the largest in the world.

Are Chinese EVs conquering Europe?

This diverse pool of market participants, the data they hold and the growth of 5G should lead to big leaps in developing next-gen smart cars. They make up half the price of an electric car, and securing their development and production has become a strategic priority. China is still on top of the market for operation and production capacity of EV batteries, with CATL being the world’s largest EV battery producer with 30 % market share.

But the EV battery technology is constantly changing, under the pressure of efficiency and load optimization targets, and what’s more, its dependency from increasingly volatile commodities like nickel and lithium pose a challenge for manufacturers.

The Chinese EV market’s dynamic could stumble on the trade war with the US and regulatory crackdown from the inside, both potentially leading to billions of investor dollars going up in smoke. Beijing is encouraging its technology companies to list on national stock exchanges in order to hedge against any forced delisting on Wall Street, amidst tension and unpredictability between the two powers. Li Auto is the second Chinese EV manufacturer that is already listed in the United States to go public in Hong Kong, after its compatriot XPeng in July this year. The Old Continent’s push towards decarbonization is presenting an ideal long-term opportunity for Chinese manufacturers to flood the market.

But this is not the first time such an opportunity arises, and besides the fact that Europe is a crowded and competitive market, China’s last attempt lost traction because it simply could not compete on quality.

But this is something China has understood, and new, less known brands are premiering with lush four-seaters, such as NIO’s ES8 SUV launched in Norway this year. Other brands that have also started deploying on the continent are Aiways, BYD, SAIC and Dongfeng with one main selling point and what ultimately could help them succeed: technology.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.
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