An EV invasion threatens to run European carmakers off the road.
The port of Vlissingen in the south-west of the Netherlands has been at the heart of world commerce for centuries.
Roughly 17,000 cargo ships dock in its deep waters between the North Sea and the river Scheldt every year, laden with everything from vital commodities such as paper, timber, and steel; coal, liquefied gases, fertiliser and other key raw materials; to well as fruit and vegetables that will quickly find their way onto supermarket shelves.
On Wednesday, the harbour took delivery of one of its most significant consignments yet: 5,000 electric cars straight from a factory in Shenzhen, China, destined for forecourts across Europe and Britain.
The Telegraph has the story.
Made by China’s biggest car-maker BYD, the shipment has the potential to turn rising international tensions into an explosive all-out trade war between Beijing and the West.
Electric cars, along with lithium batteries and solar panels, are what President Xi Jinping has proclaimed are “pillars of the economy”: sectors that the Chinese government has chosen to be the drivers of a massive manufacturing export boom. Commerce minister Wang Wentao has described them as China’s “new three” industries.
The country’s leaders are desperate to offset a property slump triggered by the spectacular collapse of debt-laden developer Evergrande, which has crushed consumer confidence. Attempts by China’s securities watchdog to prop up the nation’s $8.6 trillion (£6.8 trillion) stock market, by banning institutional investors from selling shares at the open and close of trading, shows how concerned officials are about consumer confidence.
“Since China’s reopening after the pandemic, industrial production has been quite strong but it has not got the domestic demand for that,” says Duncan Wrigley of Pantheon Macroeconomics.
“Households are reluctant to spend as much because they’re concerned about the future. People worry that if they lose a job now they won’t be able to get a replacement. That is contributing to the continued weakness in the property sector.”
Xi hopes that a state-backed manufacturing drive led by advanced goods and materials will power a fresh era of growth. But the prospect of China attempting to save its economy by flooding the West with cheap cars has policymakers in Europe and America on red alert.
The fear in Brussels and Washington is that with domestic demand in the doldrums, China will seek to ease over-capacity by dumping its goods – selling them abroad at lower prices than at home – on international markets and trashing Western industry. With officials already threatening serious recriminations, and Beijing warning of counter-reprisals, trade tensions are once again dangerously high.
As BYD’s Explorer No.1 ship was making its way through the English Channel after a five-week voyage to the Zeeland archipelago where Vlissingen juts out, the boss of Renault waded into the row with a plea to Britain and Europe to work together to resist what the industry fears will be an onslaught of super-cheap Chinese electric vehicles.
“With the internal combustion engine, our leadership was undisputed. For a century, we benefited from our expertise with this technology, and it was a barrier to entry for newcomers. Today, Europeans find themselves in a position of relative fragility,” Luca de Meo, chief executive of the French carmaker said.
De Meo and his counterparts are right to be concerned. By the second half of last year, the Chinese had captured about 10pc of the European electric vehicle market, according to Schmidt Automotive Research.
An invasion of Chinese cars promises to be great for Western consumers but terrible for carmakers in Europe. A typical Tesla can cost £40,000, whereas BYD’s models go for as little as £8,000. Chinese carmakers are offering generous discounts of up to €12,000 to boost sales on the Continent, Schmidt’s researchers found.
Even Elon Musk, the industry’s original trailblazer and someone who once laughed at the suggestion that BYD could ever compete with Tesla, is running scared. Without trade barriers, Chinese players “will pretty much demolish most other car companies in the world”, Musk said shortly after BYD toppled Tesla as the number one seller of electric models in mainland China at the end of 2023.
A report by Bloomberg’s New Energy Finance predicts that annual sales of electric vehicles will reach 56 million globally by 2040 – equivalent to 58pc of all cars sold around the world. It also believes China’s share of the electric car market will be 40pc by the end of this decade, a forecast supported by the International Energy Agency.
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