Driving a wedge in the EU EV market

Chinese carmakers are oozing technology-laden charm at the ongoing Paris auto show to woo buyers away from marque European brands. Europeans trust the bespoke luxury of Audi, BMW and Mercedes-Benz, brands built over decades of fine craftsmanship. A record 20 Chinese automobile companies are making a very different pitch at the Paris show. They are selling the future of motoring with features like assisted driving. Europe is the new battleground for engineering and technology in the automobile market. And the stakes have never been this high for either side. The modern car is as much about technology as it is about engineering, but the scales are tilting inevitably towards Chinese carmakers.

Europe's largest automobile companies VW, Stellantis and Renault are warning that they are hurtling towards the EU's 2030 emissions cliff without enough investment in battery capacity. This throttles European carmakers' electric transition and gives Chinese firms an easy entry into the only market they can expect to grow in. China, the world's biggest car market, has seen a drop in sales this year and its automobile companies are focusing their energies on exports to Europe. The continent's dependence on fuel imports, they reckon, will be a persuasive argument for EVs. Better still, EVs that come with foot massagers.

Unlike Europe, which is dominated by a handful of large carmakers, the Chinese industry is fragmented and due for consolidation. Exports to Europe will delay the process, but the EU has capped imports of Chinese hybrid cars to contain its trade deficit. This buys Europe's manufacturers some time as sales of new fuel-powered cars worldwide dip below 50%. With the US, and to an extent India, off limits for China's over 100 active car brands, Europe is their only viable destination to avoid mass-scale mergers. Europeans must make a choice between tradition and modernity. And Europe's storied carmakers must help them make the right choice.