On Friday, the European Union is expected to vote to finalize new tariffs on Chinese-made electric vehicles, after European officials accused Chinese EV companies of benefiting from an unfair level of state support.
Yet the CEO of one of China’s leading EV startups argues that the industry’s success is the result of intense local competition, not state support. “There were rumored to be close to 500 [Chinese] EV startups, probably seven to eight years ago. Now, [we’re] left with less than 10% of those names still in business,” Brian Gu, co-president at Chinese EV startup Xpeng, said Wednesday at a conference in Berlin.
Chinese domestic competition created a “highly efficient” and “highly innovative” industry, Gu claimed, that’s now thriving in global markets.
As developed markets in Europe and North America consider new tariffs and controls on Chinese-made EVs, Gu said Xpeng wanted a fair, level playing field for its cars. The company is aggressively expanding overseas, with Xpeng currently selling in about a dozen European markets.
“We want to bring the best technology that [has] developed in a highly competitive and iterative Chinese market to European customers,” Gu claimed. The car executive pushed back against concerns that Xpeng is undercutting established automakers, noting that the startup’s cheapest model sold in Europe sells at a similar price to Tesla’s Model Y.
Other Chinese EV executives also claim that fierce local competition, rather than state support, is driving China’s global EV success. Earlier this year, BYD Europe president Michael Shu argued that “management efficiency,” and not government subsidies, explained the EV giant’s low prices.
On Tuesday, Xpeng reported 21,352 vehicle deliveries in September, a record high in monthly sales for the EV startup. The company delivered 46,533 cars in the third quarter, a 16% year-on-year increase.
Xpeng generated 8.1 billion yuan ($1.1 billion) in revenue for the quarter ended June 30, a 60% jump from the same period a year ago. Yet the startup reported a net loss of 1.28 billion yuan ($180 million) for the quarter ended June 30. Xpeng has yet to release results for the most recent quarter.
Tariffs incoming
Yet Gu and his peers have an uphill climb to change the narrative about Chinese EVs.
The European Union is likely to vote Friday to finalize additional tariffs of up to 35.3% on China-made EVs, on top of the existing 10% duty on imported cars.
Some governments, like Germany and Spain, have asked the European Commission to reconsider the new taxes. German car brands like BMW, Volkswagen, and Mercedes-Benz have a significant presence in the Chinese market; all have criticized the tariffs, citing the need to avoid a trade conflict. (Volkswagen is partnering with Xpeng on EV platforms, software, and supply-chain management.)
Yet there is enough support among the EU’s member states to push through the new trade protections, Reuters reported Wednesday citing unnamed officials.
Businesses also worry Europe’s tariffs could spiral into a new trade war with China. Shortly after the European Commission announced its EV probe last year, Beijing launched an antidumping probe into European brandy. Chinese officials launched a similar probe against European pork after the EU unveiled the EV tariffs.
Yet German Vice-Chancellor Robert Habeck, who joined Gu at Wednesday’s conference, believed both Europe and China could come to an amicable agreement.
Beijing has made a proposal to “solve this conflict politically,” Habeck claimed. The German minister called on the EU to be “open,” even if it’s “a little bit late.”
Talks between Beijing and Brussels are likely to continue regardless of Friday’s vote. Both governments have until the end of the month to negotiate a solution.
