BYD electric vehicle from Shenzhen, China is ready for export to Europe. Xinhua (via Getty Images)
China’s BYD, which recently overtook Tesla in global sales of electric cars, exports cars around the world from Indonesia to Mexico to the United Kingdom. As the company and other Chinese EV makers expand, a once comfortable sector of the auto industry is becoming increasingly threatened: German car suppliers.
For decades, German suppliers such as Schaeffler, Continental and ZF Friedrichshafen have confidently flourished alongside domestic automotive giants such as Volkswagen, BMW and Mercedes-Benz. However, the transition to electric vehicles suggests that we can no longer rely on previous advantages.
“Who are the winners and who are the losers is changing,” said Christian Keims, co-head of investment banking for Germany, Austria and Switzerland at Lazard. financial times. He noted that emerging suppliers, many based in Asia and focused on batteries, software and semiconductors, are reaping high profits.
German suppliers, already battling inflation and rising interest rates amid the German economic downturn, need to invest in EVs while maintaining their market position with traditional cars. So “on the two platforms he spends twice as much, and everything except growth and profits he gets twice as much,” Keims said.
Amid these difficulties, Schaeffler launched a bid in October to buy rival Vitesco Technologies, which has become an outlier among Germany’s big suppliers for making an early bet on EVs. Five years ago, few in the industry believed Vitesco’s gamble made sense, but it now makes it an attractive acquisition target.
On the other hand, emerging Chinese automakers tend to rely on Chinese suppliers. German suppliers do active business in China, but their main customers are major German car manufacturers.
Tesla CEO Elon Musk recently praised the Chinese automaker and suggested that Chinese automakers would emerge as dominant players in the global auto industry, but in 2011 BYD cars A lot has changed since when I laughed about the quality of.
Chinese EV threat to EU car manufacturers and suppliers
Last year, an Allianz Trade report said Chinese EV makers posed a serious threat to European automakers, particularly “the car-dependent economies of Germany, Slovakia and the Czech Republic.” The report called for higher tariffs on Chinese EVs, estimating that they could cost European carmakers €7 billion a year in lost profits by 2030.
EU investigators are expected to visit Chinese EV makers BYD, Geely Automobile and SAIC Motor in the coming weeks as part of an investigation into whether they are reaping unfair advantages thanks to government subsidies. The visit between the two leaders, part of an EU investigation announced in September, will help the EU decide whether to impose higher tariffs to protect its automakers.
Read more: As Germany slides into recession and Detroit reels from China’s ultra-cheap EVs, Beijing vows to crack down on ‘blind’ construction of new EV projects
But either way, German auto suppliers are facing a changing world. Pain for European automakers is likely to mean pain for auto suppliers as well.
The expansion of Chinese EV manufacturers means more competition in auto parts, ZF management board member Stefan von Schuckmann recently told a German publication. WirtschaftsWoche. He said ZF’s goal is to generate about 30% of its total revenue in China by 2030, up from about 18% last year.
“Today’s competition with China is likely to spill over into Europe,” he said. “We must take this development seriously and adapt to survive.”