German carmakers cast vote of confidence in Chinese NEV market

BMW i3 electric cars are pictured during the inauguration ceremony of Plant Lydia of BMW Brilliance Automotive (BBA) in Tiexi District of Shenyang, northeast China’s Liaoning Province, June 23, 2022. [Photo/Xinhua]

German carmakers are casting a vote of confidence in China’s promising auto market amid the country’s rapid growth in electric mobility.

Among the major global players ramping up their investments in the Chinese market is BMW, which in late April announced an additional investment of 20 billion yuan (about 2.81 billion U.S. dollars) in its production base in Shenyang, the capital of northeast China’s Liaoning Province.

“The planned upgrades and expansions will also make Shenyang ready for the production of our NEUE KLASSE — a completely new generation of BMW models that combine all our innovations in the areas of electrification, digitalization and circular economy,” said Oliver Zipse, chairman of the Board of Management of BMW AG, in a speech.

According to the German auto giant, the investment will be used for upgrading as well as technological innovation at the Dadong plant of BMW Group’s joint venture in China, BMW Brilliance Automotive Ltd. (BBA).

“The planned investment underlines not only our confidence in China’s long-term economic prospects, but also in the innovation capabilities of our Chinese partners,” said Zipse.

Another prominent German auto giant eyeing China’s potential is luxury carmaker Audi AG.

In January this year, Audi initiated pre-mass production at the Audi FAW NEV project, its first production facility for purely electric vehicles in China, marking an important step for the company in further optimizing its strategic layout in China’s new energy vehicle (NEV) market.

In cooperation with China’s leading automaker FAW Group Co., Ltd., the project, with total investment expected to surpass 35 billion yuan, broke ground in June 2022 in northeast China’s Changchun, Jilin Province. Three pure electric models tailored for the Chinese market are expected to roll off its production lines by year-end, successively becoming available on the market from early 2025.

Ferdinand Dudenhoeffer, director of the Center Automotive Research Institute in Bochum in Germany, said the Chinese electric vehicle market is far from saturated and will continue to maintain a faster and stronger growth momentum compared to the European and American markets.

Manufacturers are achieving cost reductions and efficiency improvements through economies of scale, while the European Union’s investigation into Chinese electric vehicle “subsidies” and “dumping” is untenable, Dudenhoeffer said.

Meanwhile, a review of financial reports from German automotive giants such as BMW, Audi and Volkswagen reveals that the penetration rate of new energy products is steadily increasing.

In 2023, BMW delivered over 375,000 pure electric vehicles worldwide, a year-on-year increase of 74.2 percent, including approximately 100,000 pure electric vehicles delivered to China. Adding plug-in hybrid models delivered throughout the year, BMW Group’s global sales of new energy vehicles exceeded 560,000 units in 2023, a year-on-year increase of 30.5 percent

Last year, Audi’s global deliveries reached approximately 1.9 million vehicles, a year-on-year increase of 17.4 percent, with pure electric vehicle sales reaching 178,000 units, surging by 51 percent year on year.

As one of China’s most representative emerging industries, the NEV industry is driving the development of worldwide related sectors such as vehicle production, smart innovation research and development, and the automotive industry chain.

Highlighting that China’s vigorous development of new quality productive forces is highly compatible with BMW’s core strategy, which provides broad space for further deepening Sino-German cooperation, Zipse said that sustainable development is a path best trodden together — with China and Germany sharing the belief that green development presents a new opportunity for further expanding cooperation.

Ola Kallenius, chairman of the Board of Management of Mercedes-Benz Group, reiterated the company’s commitment to expanding its presence in China and advancing electric and digital transformation in collaboration with its Chinese partners

“China is not only the largest market for new energy vehicles, but also an innovation hub featuring industry-leading companies and a mature NEV supply chain,” he said, adding that he believed that the Chinese market will continue to grow and play a leading role in innovation in the industry.

“As we know, what moves China today moves the world tomorrow,” said Zipse.