How BYD and NIO are shaking up the German auto industry. An assessment by partner Tobias Seige, Mobility sector expert.
With Nio and BYD, two Chinese electric car manufacturers are entering the German market with big plans. A serious threat to Germany’s electric top dogs Volkswagen & Co? An assessment by Tobias Seige, partner and mobility sector expert.
The NIO ET7 has been available for a few weeks now, a smartly styled electric sedan that also received the top rating of five stars in the Euro NCAP test. In addition, emissions and energy consumption are also rated very well by Green NCAP. Are China’s young electric brands outstripping the established German carmakers in terms of e-mobility technology?
Tobias Seige: We see the market entry of Chinese electric car suppliers such as BYD or NIO as serious competition for the German automotive industry. Unlike in earlier years, Chinese automakers are now thoroughly competitive and, especially in BEVs, are sometimes even more innovative than their German competitors. The risk that they will take market share from German manufacturers in the electric car sector is therefore very real.
In which areas do Chinese rivals have an edge over German competitors?
Seige: A very important issue for many e-car buyers is range, and NIO, for example, is already playing right at the field front of competitors with its ET7 business sedan launched in Germany a few weeks ago. The base model is said to be able to travel between 385 and 445 kilometers (WLTP) with its 75 kWh battery, while the 100 kWh model is said to be capable of up to 580 kilometers. The manufacturer promises up to 1,000 kilometers for the 150 kWh model that will follow later.
In addition, NIO plans to equip the ET7 with solid-state batteries with an energy density of up to 360 WS/kg – which is 40 percent higher than what Tesla models can currently offer.
Also innovative are the so-called swapping stations, at which the batteries of NIO models can be exchanged within a few minutes. In Germany, there is currently only one such station near Augsburg, but in the future this could be an additional selling point for potential customers.
But can the cars keep up with German engineering in terms of quality?
Seige: The first tests from car magazines are predominantly promising, and the Euro NCAP results also speak for high safety standards and solid quality. Unlike the cars Chinese manufacturers once tried to conquer with the European market about two decades ago, today’s electric models are also absolutely competitive in terms of technology and quality.
In the coming years, the battle for raw materials such as cobalt and lithium will intensify. Do Chinese manufacturers such as NIO and BYD have an advantage over Europe’s auto industry in terms of supply chains and depth of value added?
Seige: BYD, for example, aims to sell 120,000 e-cars in Germany as early as 2026, which would correspond to a market share of ten percent. BYD’s vertical integration is significantly higher than that of German manufacturers, because BYD produces its own battery cells. Supply bottlenecks are therefore not to be expected. And it is of course an advantage to have the extraction of the relevant raw materials for high-performance batteries right up to the front door, so to speak. This means that China’s electric car manufacturers can buy cheaper and have lower transport costs and shorter supply chains, too.
In this context, how do you rate the purchase of 100,000 BYD electric cars by Europe’s largest car rental company Sixt? Is this more than a PR coup?
Seige: The incorporation of 100,000 BYD electric cars into the Sixt fleet over the coming years is particularly noteworthy. Until now, the car rental company’s fleet has mainly featured premium German brands such as BMW, Mercedes and Audi. From our point of view, this is a remarkable development. Especially because the BYD brand, which is still largely unknown in Germany, thus becomes more present in the streetscape and in people’s minds. A kind of free advertising, which will of course also help later when selling the cars to private and corporate customers.
Tobias Seige, Partner, Sector Expert Mobility, Industrials & Robotics
Copyright cover image: Michelle Becker, Getty Images