In recent years, China’s business network has woven an intricate web of investments and operations worldwide, with Europe emerging as a key strategic destination.
However, a notable shift is transforming this narrative.
The truth is that more and more Chinese firms are abandoning their previously laid plans in Europe, a phenomenon that is capturing the attention of industry experts.
In this analysis, Mobility Portal Europe explores the reasons behind this transformation and its potential repercussions on the international economic landscape.
What Chinese companies are abandoning their plans?
Great Wall Motor (GWM), a global intelligent technology company whose business includes the design, R&D, production, sales, and services of automobiles and parts, will close its headquarters in Munich on 1st August, resulting in the loss of 100 jobs, including the management team.
According to reports from Nikkei Asia, the firm will also halt its expansion plans in Austria and Switzerland, opting instead to serve markets such as Germany, the United Kingdom, and Ireland from its operations in their country.
This change of direction comes after a period of unsatisfactory sales of electric vehicles (EVs) in the continent’s largest automotive market.
GWM had announced its initial plans in 2021 to introduce EVs to the European market.
Subsequently, in 2022, it established a partnership with Emil Frey, the largest car dealership group in Europe, to facilitate the distribution of its Ora and Wey brand vehicles in the region.
However, the company did not achieve its sales targets in Europe, with only 6,300 new local registrations reported in 2023.
It is worth remembering that, last year, Great Wall Motor announced its goal of achieving annual sales of one million units in international markets by 2025.
Consequently, Svolt, the Chinese battery manufacturer that emerged from GWM, announced it would take similar measures this year.
Indeed, the corporation had plans to establish manufacturing plants in Germany but has since reevaluated its location strategy.
Originally, Svolt’s plan included constructing up to five gigafactories in Europe to supply both local partners like Stellantis and Asian partners such as CATL and Automotive Cells Company.
The goal was to set up a production capacity of at least 50 Gigawatt hour by the end of the decade, sufficient to manufacture up to one million electric cars.
However, with the suspension of these plans, Svolt has put all these ambitions on hold.
Although it confirms its intention to establish a battery manufacturing plant in Überherrn, in the German state of Saarland, the start date for operations of Svolt’s first European factory, initially planned for the end of 2023, has been repeatedly delayed.
Kai-Uwe Wollenhaupt, President of Svolt Europe and Senior Vice President of Svolt Energy Technology Company Ltd, states: “The automotive market is currently facing considerable fluctuations and challenges worldwide, driven primarily by the shift towards electric mobility.”
The company attributed its decision to the current instability in the automotive industry, the lack of planning and legal security for the construction of production facilities, and the fact that a significant client project would not proceed as planned.
Additionally, they highlight factors such as insufficient planning at various levels.
There, a factor that may also be related to GWM’s departure is mentioned: concerns about the tariffs proposed by the European Commission on the import of electric cars from the Asian giant.
In addition, underlying the ongoing debates about the eventual phasing out of combustion engines in the European Union (EU), which the company considers “counterproductive.”
Read more: Market share: Chinese EVs demand falls in the EU
Impact and potential consequences
The total removal of Chinese electromobility factories from Europe could have various repercussions, both positive and negative.
Regarding the adverse consequences, one of the main concerns is the potential disruption of the electric vehicle supply chain.
China has become a crucial producer of batteries and other essential components for these cars.
A sudden halt in imports could destabilize the supply in Europe, causing shortages and an increase in EV prices.
Furthermore, the growth of the European market could be affected.
The availability of affordable Chinese eCars has been a key driver for its development.
Without the Asian competition, European manufacturers might have fewer incentives to keep prices competitive, which could slow down the adoption of EVs in the region.
Another negative consequence would be job losses, because the Chinese electromobility industry employs a considerable number of people in Europe, both in manufacturing and sales.
However, there are also possible “positive” effects.
The withdrawal of such competition could provide Occidental EV manufacturers with a larger market share.
This could foster increased investment in research and development, benefiting the local industry in the long term.
Moreover, this situation could help reduce Europe’s dependence on China.
The continent has been seeking to decrease its reliance on various goods and services, and the removal of Chinese electromobility factories would be an important step towards this goal.
However, is this the right path for the old continent?
