In Europe, the birthplace of the automobile, the “dream of peace” was not broken by black steamships (note: Japan called foreign ships arriving in Japan at the end of the Edo period “black ships,” specifically referring to Perry’s fleet in 1853, which forced Japan to open its gates), but by huge white ships transporting purely electric vehicles (“EVs”).
In late February, the first RORO Ship ordered by BYD, a major Chinese EV company, arrived in ports in the Netherlands and Germany. The 200-meter-long BYD EXPLORER NO.1, loaded with more than 5,000 EVs, left a port in southern China in mid-January and sailed north around the Cape of Good Hope on the southern tip of Africa.
In 2023, China’s automobile exports reached 4.91 million units, surpassing Japan’s (4.42 million units) to become the world’s No. 1 for the first time. On the other hand, the share of Chinese cars in the European market is only about 3%. Although it is slowly increasing, the share is still less than that of Toyota or Hyundai Motor (South Korea).
The reason for this is that there are bottlenecks in transportation. Most of the large Chinese EV manufacturers are start-ups, unlike Toyota, which has its own dedicated chartered ships. These companies need to entrust the shipping company to ensure their own transportation quota, and China’s automobile transport ship transportation capacity is less than 3% of the global.
Chinese EV giants are competing for limited transportation quotas, resulting in average daily charter rates for transport vessels reaching a record high of $115,000 in 2023, skyrocketing to seven times what they were in 2019, prior to the New Crown outbreak.
The Pathfinder 1 is the forerunner of BYD’s plan to secure eight of its own dedicated ro-ro vessels within two years that can carry 7,000 EVs without the use of cranes. BYD’s rival Shanghai Automotive Group also ordered a new ship, which left port in January for Europe.
Matthias Schmid, a German automotive economist who points out that the monthly inflow of cars from China is limited to less than 50,000 due to transportation constraints, said that “2024 will be the year of a dramatic increase in the number of cars from China, and a big change in the EV landscape”.
Since 1853, before the “Black Ship” opened the doors of Japan, Western products and ideas have penetrated into the closed Japan. Similarly, the automobile industry in Europe has become more and more Chinese.
For example, the Mercedes-Benz Group, a large German premium car company. The company’s largest shareholder is China’s Beijing Automotive Group, and its second largest shareholder is Chairman Li Shufu of Zhejiang Geely Holding Group, which together hold nearly 20 percent of its shares. Geely is also the parent company of Volvo, a Swedish premium car company.
“The partnership with Geely was made because of the cutting-edge technology and design capabilities. It doesn’t matter if it’s a Chinese company or not”, said Jim Rowan, Volvo’s Chief Executive Officer (CEO), as he decided not to run Polestar, the Swedish premium EV brand that he had established with Geely, but to leave it in Geely’s hands.
It’s not just the cars themselves. Although Volkswagen has set up an on-board battery company with the strength of the group, it is increasingly relying on Guoxuan Hi-Tech, a major Chinese battery company, for development and manufacturing. To make EVs, it is difficult to leave the Chinese company that has a 60% global share of on-board batteries.
Chinese EVs are 20% to 40% cheaper than their European counterparts, and the EU seems inclined to restrict the import of Chinese EVs. On the other hand, the European Union to promote the popularization of EV and need to reduce prices. If China’s EVs are excessively excluded, the automotive industry in the region may not be able to develop. The time for Europe to open its doors under the dilemma is approaching.