Europe may as well go where the customers are.
It seems like every time an auto show rolls around, we hear about the latest Chinese automaker that is ready to conquer Tesla and eventually sell electric vehicles in the United States. While some are vaporware, it's hard to ignore how big of a role China will play in the coming years as EVs become more popular. While only 1% will actually succeed, there are so many startups in the EV sector that actually equates to a substantial number.
European automakers like BMW have also enlisted the help of Chinese partners for EV production. Some reports, including a recent one from CNN, say that Europe may simply need to give up in the race towards EVs and focus on building cars in China.
When speaking about EV production, Simone Tagliapietra, an energy analyst at a Milan-based think tank said, "Europe might well see its carmakers massively moving production to China in the future." Building electric cars in China would place European automakers closer to their potential customers and avoid any tariffs.
China is also where most of the batteries for EVs are produced, so "it just makes sense to produce electric vehicles where batteries are also produced," Tagliapietra said. Currently, two-thirds of lithium-ion batteries are produced in China. Only around 1% of these batteries are produced in Europe and it would take a huge investment in order to catch up.
China also holds the advantage as the world's largest market for electric cars. With the massive pollution issues in China, EVs will soon become more of a necessity than a luxury. Even Volkswagen and Tesla have announced plans to build factories in China, showing how viable the country is for EV production.
Europe is trying to become more friendly towards EV production but it simply cannot match China. "In Europe, there's a lot of hassle and a lot of procedures to follow. It takes a long time," said Kee Koolen, chairman of Lithium Werks, adding that China has a "long-term vision" for EV production, while Europe does not.
Automakers in Europe didn't take EVs seriously initially and will now have to play catch up with China. European automakers are finally launching new EV models including the Jaguar I-Pace, Mercedes EQC, and Audi e-Tron but it may already be too late to catch up with China.