Study: European Automakers Should Worry About Competition From China

A study by an American think tank says European automakers should be worried about competition from China. A report released last week by the National Bureau of Economic Research said China should “pursue new…

Study: European Automakers Should Worry About Competition From China

A study by an American think tank says European automakers should be worried about competition from China.

A report released last week by the National Bureau of Economic Research said China should “pursue new market entrants by open source development and market access laws and policies and foster domestic manufacturing for critical technologies.”

The report said Chinese automakers like BYD (BYD, which is now majority owned by Warren Buffett’s Berkshire Hathaway) have made huge strides with the widespread adoption of new technologies.

The technology includes electronic controls, battery electronics, and propulsion.

It also said Chinese manufacturers are moving toward high-speed combustion engines and hybrids, which are used for short distances, while in Europe, traditional combustion engines are still the primary way of transporting mass amounts of energy.

The study found BYD had beaten a number of established European automakers to the punch on some technologies, including electric, hybrid and all-electric vehicles and batteries.

Yeshui Cao, of the NBER, said the Chinese can “make first moves to lower costs and improve quality without introducing new competitors on the American market.”

“It gives Chinese manufacturers an opportunity to catch up quickly and that, of course, affects (U.S.) companies in the long run,” Cao told MarketWatch.

He added that Chinese automakers “can develop an established and credible brand and appeal to consumers.”

Stanford University said this past April that BYD had obtained about 3 percent of the global market for electric cars.

BYD sold 17,000 vehicles in Europe last year but the number likely doubled this year, said Cao.

“BYD has come out as a serious competitor to Western automakers,” said Nicholas Lardy, an economist and senior fellow at the Peterson Institute for International Economics.

BYD produces various models in China that are exported to the U.S. and Europe.

The world’s largest publicly traded automaker, General Motors (GM), said last month that BYD was among the companies it had granted access to parts for electrification of their internal combustion engines.

Nissan-Renault announced last year that BYD would supply lithium ion batteries for its E-Trail for European markets, according to Reuters.

“China is not a market where just Chinese companies can be viable and will keep coming on top of the global energy market,” said Cao.

Leave a Comment