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Recently, the European Automobile Manufacturers Association (ACEA) released data, the European market in May sales of 1.09 million vehicles, down 2.6% year-on-year, three quarters of the major markets have experienced a decline. Among them, the sales of pure electric vehicles in Europe decreased by 11% year-on-year; Sales of pure electric vehicles in the EU fell by 12% year-on-year to 114,000 units, and market share declined by 0.6% year-on-year.

Almost at the same time as ACEA, the Passenger Association released China's automobile export data for May. Data show that in May, China's automobile exports of 568,000, an increase of 29% year-on-year, an increase of 2% month-on-month, accounting for 98% of new energy vehicle exports of new energy passenger vehicles in the first five months of 850,000 exports, an increase of 31%.

Economic Observer network noted that while new car sales in Europe fell in May, the growth rate of China's exports to Europe fell by 30% year-on-year, and the growth rate of new energy passenger car exports to Europe fell by 66%. In addition, the average price of new energy vehicles exported from China to Europe is also falling.

In this regard, Cui Dongshu, secretary general of the Association, told the Economic observer network that the decline in European new energy vehicle sales was caused by the cancellation of car subsidies in major EU countries, and the growth rate of China's exports to Europe declined because of the EU tariffs, car companies were more cautious in May, and the average price fell mainly because of the reduction of Tesla exports.

European market new energy decline, hybrid growth

ACEA data shows that Belgium and France, the third largest market for BEV (pure electric vehicle) sales in Europe, were the only two key markets to achieve growth in May, with increases of 44.8% and 5.4% respectively. In contrast, electric vehicle sales in Germany and the Netherlands dropped significantly, at -30.6% and -11.7% respectively.

In addition to BEVs, PHEV (plug-in hybrid vehicle) sales also decreased by 14.7%, and PHEVs accounted for 6.5% of the EU market, down 0.9% year-on-year. Among them, Belgium and France fell 36.6 and 19.4 percent, respectively, while Germany saw a small increase of 1.7 percent.

As sales of pure electric vehicles and plug-in hybrids declined, sales of hybrid vehicles (HEV and light hybrid) rose to 27 percent. Its market share rose from 25% to 29.9%.

The decline in BEV and PHEV sales and the increase in HEV sales correspond to Tesla's "frustration" and Toyota's and Volkswagen's "pride". Tesla's sales in the European Union fell 34.2 percent in May, Toyota's (including Toyota and Lexus) sales rose 13 percent in May from a year earlier, and the Volkswagen brand rose 4 percent. From the Model point of view, Tesla Model Y sales in May fell 49% year-on-year, ranking fell to 18th, Volkswagen T-Roc, Golf ranked first and second, sales increased by 12% and 28% year-on-year.

The reason for this is that electric cars are more expensive in Europe than fuel cars. Currently, the average price of an electric car in the European market is more than 35,000 euros, and the British online car trading platform Auto Trader pointed out in April that the average selling price of a new electric car in the UK is 33% higher than that of a comparable fuel car. The reason for the high price of electric vehicles in Europe, in addition to the underdeveloped local supply chain in Europe, the most direct factor is the reduction of government subsidies, which have been heavily dependent on government subsidies for sales growth in Europe.

Andy Palmer, CEO of charging company Pod Point and former head of Aston Martin, said publicly that electric car subsidies are being withdrawn too early, and consumers are unwilling to pay more for electric cars based on inadequate infrastructure.

Germany, Europe's largest car market, saw a sharp drop in electric car sales after subsidies ranging from €3,000 to €4,500 were removed at the start of the year. A German research firm predicts that the number of pure electric vehicles sold in Germany this year will fall by about 50,000 from 520,000 last year.

In France, where BEVs are growing, there is currently a €4,000 subsidy for consumers buying electric vehicles, an additional €3,000 for households earning less than €15,400 a year, and an eco-subsidy (similar to a replacement subsidy) of up to €5,000. The Flanders region of Belgium subsidizes electric vehicles up to 5,000 euros, in addition to deducting personal income tax, electricity consumption tax and so on.

Europe's charging infrastructure is still lagging behind. The first is the lack of charging points, with 1.4 per 1,000 people in Europe by the end of 2023, according to ACEA data. Secondly, the construction of public piles is scattered, 61% of the 632,000 public charging piles in Europe are deployed in the Netherlands, France and Germany; In addition, slow charging, 88% of public charging piles are AC slow charging piles of 22kW and below, and 150kW DC fast charging piles account for only 4.7%.

Tariffs are imminent, China's new energy sales and average prices fell

At present, Europe is still an important region for China's auto exports, accounting for 34%, only 0.6 percentage points smaller than Asia. But the growth rate of China's new-energy vehicle exports to Europe has slowed. China exported 193,000 new energy vehicles to Europe in May, unchanged from April. From January to May, China exported 826,000 new energy vehicles to Europe, with a year-on-year growth rate of 10%, while last year's growth rate was 120%, a far cry.

Among China's new energy vehicles exported to Europe, exports of pure electric vehicles have fallen the most. In May, China exported 54,000 pure electric vehicles to Europe, 10,000 fewer than in April, down 15.6% from the previous month, 22% lower than the same period last year, and 15% lower from January to May. Plugging into a car is no better. China exported 5,000 plug-in vehicles to Europe in May, down 21% from a year earlier and down 36% in the first five months. May and the previous May were down 21% and 36% respectively.

Regionally, Belgium (the largest exporter of new energy vehicles to China before May) and the United Kingdom are the two main countries for China's new energy vehicle exports, but China's export growth to these two countries in May was -11% and 0. At the same time, although Belgium and the United Kingdom are still the top three of China's new energy exports in May, the proportion of overall exports decreased by 13% and 1%, respectively. China's new energy vehicle exports to Spain and France fell by as much as 65% and 76% respectively.

"Mainly the impact of the EU's upcoming tariffs", Cui Dongshu said that because it is possible to transport vehicles to Europe, it is the date of the EU's tariff increase (July 4), so car companies are very cautious in May.

McKinsey global director partner Peng Bo said that Chinese vehicles exported to Europe, from the date of the Chinese customs calculation, the date of the EU calculation of whether to impose tariffs is the date of consumer purchase, if coupled with the vehicle to the dealer, the dealer sold the vehicle, the time is longer, and once this date, the price competitiveness is greatly discounted. There are real risks for carmakers.

It is worth noting that in addition to the decline in growth, the average price of China's new energy vehicles exported to Europe is also declining.

The average export price of pure electric, plug-in and hybrid passenger cars in China in 2023 was $22,000, $31,000 and $21,000, respectively, but the average price in the first five months of this year was $20,000, $26,000 and $20,000, respectively. In the first five months of this year, the average price of new energy vehicles exported by China fell by $5,000 in Turkey, $4,000 in the United Kingdom, Germany and Poland, and $2,000 in Belgium and Spain.

Cui Dongshu believes that the drop in average price is due to Tesla, on the one hand, Tesla exports fewer vehicles to Europe, on the other hand, its exports to Europe are mainly the lower-priced Model 3. It is understood that the main export of SAIC passenger cars and Tesla in Shanghai port, recent car exports are unusually low, exports in May than last month reduced by 28,000, down 44%, January to May to 360,000 vehicles, down 16%.

However, Peng Bo said that it is not ruled out that Chinese car companies have lowered the price of vehicles exported to Europe, after all, now Europe is in need of low-cost electric vehicles.

For the development of Chinese cars in Europe, Cui Dongshu believes that although the export of new energy vehicles to Europe has temporarily slowed down, but with the gradual adaptation to the impact of European countervailing, China's new energy vehicles to Europe should be able to pick up. And despite looming EU tariffs, Chinese automakers' market share in Europe rose 0.3 percent in May.