The recent expansion of China’s electric vehicle (EV) presence in Europe has encountered an unforeseen challenge due to a shortage of specialized shipping vessels required to transport these EVs. Although sales growth has temporarily slowed down, it is expected to recover after 2005, as EU and UK regulations enforce quotas to encourage electric vehicle sales. This shortage of shipping vessels has consequently impacted the supply chain, causing delays in getting the EVs to European customers in a timely manner. However, investments in the shipping and logistic sectors are anticipated to steadily rise to meet the growing demand for EV transport, thus expediting the distribution process and ultimately contributing to thriving EV sales in the European market.
European manufacturers lagging behind China
At present, European manufacturers are about five years behind China regarding EV production and sales. China holds an estimated 30% price advantage and primarily targets electric SUVs priced between €30,000 ($32,500) and €50,000 ($54,000). The introduction of more affordable electric vehicles, such as the Chinese-made Seagull (starting at €10,000 or $10,800) and Wuling Bingo, should provide a significant push forward. These affordable options challenge European automakers to innovate and adapt to stay competitive in the rapidly evolving EV market. To catch up with China, European manufacturers need to focus on offering cost-effective and high-quality electric vehicles and improving their infrastructure to meet consumer demands.
Growth in European EV sales
Investment bank UBS forecasts that battery electric sales in Europe will increase to approximately 2.1 million in 2023, 2.5 million in 2024, 3.6 million in 2025, and more than double to 9.6 million in 2030. While Chinese manufacturers are primed to benefit from this expansion, the current shortage of shipping vessels may impede their progress. This surge in demand for electric vehicles is primarily driven by the growing focus on environmental sustainability as well as government incentives supporting green technologies. In light of the shipping constraints, European automakers and government officials need to collaborate strategically in order to secure adequate supply chains and overcome potential bottlenecks in battery electric sales within the region.
Chinese EVs in Western Europe
Schmidt Automotive reports that around 440,000 Chinese cars and SUVs were transported to Western Europe in the first 10 months of 2023, with 60% being Chinese and the remainder being Western brands such as Tesla, BMW, and Renault’s Dacia. The company also noted that current shipping capacity limitations are restricting further growth, as no more than 50,000 units per month can be shipped from China to Western Europe. To combat these capacity limitations, automakers are exploring alternative shipping routes and working closely with logistics providers to streamline the transportation process. Additionally, the demand for Chinese-made vehicles in Western Europe is expected to rise, fueling the need for infrastructural improvements and increased collaboration between the regions.
Shipping challenges during the Covid-19 pandemic
A large number of older ocean-going car transporters were scrapped during the Covid-19 pandemic, and replacement vessels have been slow to appear. This has led to an accumulation of vehicles at ports awaiting export and a sharp rise in chartering prices, which could offset the cost savings gained by manufacturing vehicles in lower-cost countries like China. As a result, automotive manufacturers and shipping companies are facing immense pressure to find alternative methods to transport these vehicles in a timely and cost-effective manner. This challenge has also sparked a renewed interest in exploring innovative solutions such as sustainable shipping and advanced logistics management to mitigate the bottlenecks and balance the cost disparities.
Opportunities for European automakers
This unexpected challenge may offer European manufacturers a temporary reprieve as they strive to match Chinese competitors in the production and sale of affordable electric vehicles. In the short term, this situation could provide European automakers with the opportunity to refine their strategies, increase production capacity, and potentially capture a larger market share. Moreover, this pause in China’s dominance may motivate European manufacturers to accelerate their innovation and development of competitively priced electric vehicles, ultimately benefiting consumers with a greater range of choices.
First Reported on: forbes.com
What is causing delays in Chinese EV shipments to Europe?
The shortage of specialized shipping vessels required to transport Chinese electric vehicles (EVs) to Europe is causing delays. This shortage has impacted the supply chain and distribution process, leading to slower sales growth temporarily.
What is the difference between China and European manufacturers in the EV market?
European manufacturers are currently about five years behind China in terms of EV production and sales. China holds a 30% price advantage and primarily targets electric SUVs priced between €30,000 ($32,500) and €50,000 ($54,000). European manufacturers need to focus on offering cost-effective and high-quality electric vehicles and improving their infrastructure to catch up with China.
How does the growth of European EV sales look like?
According to investment bank UBS, battery electric sales in Europe are forecasted to increase to approximately 2.1 million in 2023, 2.5 million in 2024, 3.6 million in 2025, and double to 9.6 million by 2030.
How has the Covid-19 pandemic affected shipping capacity for EVs?
The Covid-19 pandemic has led to the scrapping of several older ocean-going car transporters, and replacement vessels have been slow to appear. This has resulted in an accumulation of vehicles at ports, a sharp rise in chartering prices, and increased pressure on automotive and shipping companies to find alternative transportation methods.
What opportunities does the shipping challenge provide for European automakers?
This unexpected challenge may offer European manufacturers a temporary reprieve as they strive to match Chinese competitors in the production and sale of affordable electric vehicles. In the short term, this situation could provide European automakers with the opportunity to refine their strategies, increase production capacity, capture a larger market share, and accelerate their innovation and development of competitively priced electric vehicles.