For anyone who pays attention to the whirr and hum of passing cars while strolling down the street, new names have started appearing in recent months. A notable majority are from MG. Chinese automakers have spotted a goldmine in Europe’s electric car market. Their presence spread quickly across Spain, where twelve brands entered the scene (BYD, DSFK, Link & Co, Maxus, MG, Omoda, Smart, Skywell, SWM, Voyah, Yudo, and Zhidou), challenging local producers and inviting other European countries to join the competition. Everything seems to be aligning in their favor. Six of the ten largest producers of electric vehicles globally come from China. The rise of Chinese electric models, alongside ambitious investments aimed at building sizable factories in Spain, could propel a sector that has lagged behind in the race to define the car of the future.
BYD leads the world with 1.98 million electric cars sold from January to September this year, the only Chinese company with minimal state intervention. Close behind is Tesla, Elon Musk’s company, with 1.32 million EVs in the same period. GAC Aion and China-based brands sit at third with 359,732 units sold. Other Chinese-founded brands in the global rankings include SGMW, Li Auto, Changan, and Geely. MG sits in eleventh place under its parent SAIC. In Spain, 2022 saw Chinese vehicle purchases surpass €1.399 billion, up 1.905% from 2021. Twelve smaller brands, offering both combustion and electric models, captured a 3.7% market share with 32,213 passenger car sales in the first eleven months of the current year. Among these, eight out of ten Chinese passenger cars sold in Spain in 2023 come from MG, which led the market with its ZS model in August and September. It’s worth noting that Spaniards have bought more traditional gasoline vehicles from China than electric ones, as shown by the MG ZS: 16,729 of 17,255 units were the gasoline variant.
So what does the rise of Chinese electric cars mean for Spain’s car market? The country ranks as the second-largest automobile producer in the European Union, trailing only Germany, and stands among the world’s top manufacturers thanks to a competitive auto sector and a robust components supply chain. Chinese producers are delivering more cars at lower prices, driving down the cost of Chinese electric vehicles. This price competitiveness prompts predictions of a further drop in EV prices in Spain, according to Donia Razazi, a senior industry expert at the consulting firm Ayming. For consumers, this is welcome news. For automakers, it means heightened competition, and for components makers, a potential opportunity to expand their reach to more buyers.
‘Made in China’ cars in Europe
The entry of Chinese companies into Europe sparks more than market activity; it also attracts significant investments to set up large factories. Envision has secured 300 million in public aid, 200 million in non-repayable subsidies, and 100 million in loans through another wave of the Electric and Connected Vehicle Program to establish a massive plant in Navalmoral de la Mata in Cáceres. BYD is considering two European facilities, possibly including one in Spain. Industry groups highlight the advantage of hosting vehicle and battery gigafactories on home soil, especially as Europe aims to shift to zero-emission travel from 2035. Anfac, the automotive association, notes these incentives align with the goal of keeping Spain among Europe’s leading vehicle producers. Spain’s renewable energy strengths help lower production costs and support proximity advantages for battery manufacturing and vehicle assembly, reducing the need for long-haul battery shipments.
China now produces roughly 60% of the world’s electric cars, vaulting ahead of Japan to become the leading global auto power for the first time this year. In the first half of the year, nearly 400,000 EVs were exported to Europe, where Chinese manufacturers have concentrated their efforts in recent years. The story of China’s electric vehicle sector goes back to the 1990s, when the country began investing early in electric mobility while others still leaned on combustion engines. Today, subsidized EV purchases, a charging network that outpaces many peers, and sustained technological progress have kept China ahead in this race.
infrastructure gaps
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Europe is advancing in EV adoption, but it remains a journey to mass consumer adoption. To meet Europe’s decarbonization targets under Fit for 55, Spain aims to grow its market share this year. Projections place year-end EV passenger vehicle sales around 110,000, about 15% below an ideal 190,000. The charging network mirrors this challenge: as of September, 25,180 public charging points existed, yet 8,869 were not operational. About a quarter of the total infrastructure faced underperformance, and 74% of active points offer low power, implying a minimum three-hour charging time. Anfac underscores the need to streamline administrative steps so a high-power charger can be operational in weeks rather than months, to close gaps with peers in countries like Germany and Portugal. Energy and electricity firms are stepping in, with Repsol, Cepsa, BP, Iberdrola, Endesa, and Naturgy announcing plans to expand charging capacity in the coming years.