How will Germany's EV development turn affect Chinese car companies?

As Europe's largest auto market, Germany's auto market is indicative for the whole of Europe. in 2022, Germany's annual electric vehicles accounted for 25% of new car production, and the total sales accounted for 39% of the whole of Europe.

Based on the 2022 German new car registration data, gasoline cars have the largest market share at 32.6%; diesel cars are in second place at 17.8%; the market share of pure electric cars continues to climb, slightly lower than the diesel, with a share of 17.7%; and the share of plug-in hybrids, which are otherwise revered by European consumers, slipped as low as 13.7%.

In continental Europe, where electric vehicles are more highly regarded, there is still a big gap between the share of purely electric models in Germany and countries like Norway and Denmark. Gas and diesel vehicles still have a relatively large market share.

Who can shake up Tesla?

Looking at the German pure electric car sales rankings in 2022, Tesla is still the dominant player. model?Y and model?3 sales ranked the top two. But Tesla's lead is not obvious. Whether it's the Fiat 500e in third place, or the Volkswagen ID.series electric car right behind it.

It's worth noting that in September 2022, for the first time, the Tesla Model?Y beat out Volkswagen's Golf and Tiguan models to debut as Germany's top-selling model for the month. It was also the first time in German automotive history that an electric car topped sales.

Last year, Tesla came out on top with 69,962 units, while its main rival VW sold 63,206.

Considering that Tesla has no plans to bring other EVs to the market in the near future, if VW can bring a steady stream of EV models to the market based on the MEB platform or the MEB+ platform, it will have a good chance of overtaking Tesla in overall sales in Germany and even in the European market.

The BBA, a traditional European luxury brand, is completely missing from the top 10 ranking. The best seller was the Audi?e-tron, but with only 13,232 units sold for the year, it was a very significant gap from Tesla's two models.

If you look at the BBA dimension, thanks to the more comprehensive results of VW's transition to the pure electric sector, Audi has two models in the EV sales rankings from 11th to 20th in Germany, the e-tron and the Q4 e-tron, and both are quite a bit ahead of the BMW i3 in terms of sales. As for Mercedes-Benz, none of its models made the cut.

Changing Europe's combustion ban

The European Parliament previously adopted regulations for a full transition to all-electric vehicles by 2035, which excluded hybrids, plug-in hybrids, and powertrain systems with internal combustion engines such as superchargers.

But Germany changed that total ban, with the German transport minister saying in a social media post on 25 local time that the German government had reached a **** understanding with the European Commission over the dispute over the ban. It will still be possible to register new cars after 2035 using carbon-neutral fuels like renewable fuels.

This means that traditional German car companies will be able to continue to sell models with internal combustion engines as long as they technically update their own internal combustion engine systems from burning gasoline and diesel to burning renewable fuels. And compared with electric cars, renewable-fueled vehicles have no mileage anxiety and can be refueled with renewable fuel at the pump just like regular fuel cars.

In the view of the German car giants, renewable fuels would even outperform electric cars by quite a bit in terms of reducing carbon emissions if the electricity is derived from coal-fired generation.

Germany's traditional automotive industry is too large, the full transition to electrification, will let the German industry's previous accumulation, especially the advantages accumulated in the internal combustion engine no longer exist, which will not only affect the competitiveness of the German automotive brands in the global arena, and more likely to affect the German national economy.

So in the EU's radical strategy, Germany will be renewable fuels as a buffer to win more time for their own transformation, while maximizing will take into account the existing field of internal combustion engine staff and R & D and production facilities, to achieve their own interests are maximized.

How will Chinese automakers be affected?

Beginning last year, domestic car companies accelerated their pace of entry into Europe. Among them, BYD won an order for 100,000 cars from SIXT?Europe's largest car rental company, and the first few thousand cars have already been delivered.

The 2035 ban on combustion regulations previously set in Europe is a great boon for domestic car companies. In the domestic auto market, we not only have the world's largest-selling new energy vehicle companies like BYD, but also new power car companies like Azure Xiaoli.

In addition, in the core parts and components industry chain of intelligent electric vehicles, there are also a number of battery companies and self-driving technology companies in China. From the point of view of the entire intelligent electric vehicle industry chain, the advantages of Chinese car companies are very obvious.

But with renewable fuels getting exemptions in the European market, it's not a good thing for domestic EV companies, especially the new forces that are moving into the European market.

In the long run, traditional European carmakers, including the BBA and Volkswagen, won't slow down their transition to electrification, but their combustion-engine models will likewise be active on the scene for a long time. So domestic independent brand car companies will face increasing challenges in the process of developing the European market.

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