China's car offensive in Europe

"With the Chinese state-owned company Chery, the next company from the People's Republic is investing in Europe. Spain is celebrating this as a great success - while Saarland in Germany is coming away empty-handed.

 

China's car offensive in Europe is gaining momentum. With the Chinese state-owned company Chery, which is largely unknown in the West, the next company from the People's Republic is investing in Europe. The Spanish Prime Minister Pedro Sánchez rushed from the EU summit in Brussels to Barcelona on Friday morning for the ceremonial signing of the contract. 

 

He called the agreement between Chery and the Spanish car manufacturer EV Motors a "symbol" of the reindustrialization of Catalonia and all of Spain.

 

1,250 jobs are to be created in Barcelona. The joint venture plans to produce 50,000 vehicles annually by 2027, and then 150,000 in 2029. Chery plans to start assembling Omoda brand vehicles this year. An electric all-wheel drive pick-up from the EV Motors brand Ebro is to follow in the fourth quarter of 2024.

 

For Spain, it is a great success that the Chinese have chosen the port city, because it means that life is returning to the industrial area in the "Zona Franca" industrial and logistics district. Nissan stopped production there a good three years ago, which was a serious setback for the Barcelona site. After 40 years, the production lines in the Sants-Montjuïc district came to a standstill, and thousands of jobs were lost in the middle of the pandemic. For years, the central and regional governments struggled to create a center for electromobility there. After several visits to China and long negotiations, EV Motors, which holds the majority of the joint venture, and the Catalan regional government finally decided on Chery.

 

Defeat for Ford plant in Saarlouis

 

Chery's decision for Spain apparently meant another defeat for Germany. The Chinese had also negotiated the Ford plant in Saarlouis; However, the talks ended without result, although the state government is said to have promised extensive funding. Now there is a risk of more than 4,000 jobs being lost there. 

 

Ford decided in the summer of 2022 to close the plant in Saarlouis. The next generation of electric cars should instead be built in Valencia, Spain. However, the American group is now reviewing its entire commitment in Europe, which could also affect Spain.

 

The Chery plans are part of an offensive by Chinese manufacturers in Europe. With Volvo, which belongs to the Geely Group, and MG, which is part of the Shanghai state-owned company SAIC, the Chinese car industry has long been present in Europe. However, these were brands and plants that came into Chinese ownership through takeovers. As part of its cooperation with the Stellantis Group, the Chinese start-up Leapmotor also has plans to manufacture in Europe.

 

Major project in Hungary

 

Chery's investment is now the second major investment by a Chinese group in its own plant in a short period of time. 

 

The electric giant BYD had previously sealed a major project in Hungary. 

 

SAIC, which currently only uses its British MG site for research and development but wants to manufacture in Europe again, could soon follow suit. The investments are also linked to impending tariffs. These could be the result of an investigation by the EU Commission into Chinese subsidies for electric cars. By manufacturing in Europe, the companies could avoid these tariffs.

 

Chery comes from Wuhu, south of Nanjing, was founded just over a quarter of a century ago and is more globally positioned than almost any other Chinese car company. For more than two decades, the group has claimed the title of "China's largest car exporter". However, some analysts saw SAIC ahead in 2023. Around one in five cars that go out into the world from China comes from Chery, i.e. almost a million vehicles. In total, the company recently manufactured almost 1.9 million cars a year, an increase of half. Unlike BYD, for example, Chery continues to rely on combustion engines.

 

Some of Chery's activities are likely to raise eyebrows in Europe. The Chinese invested in a factory in Iran two decades ago and announced in 2016 that they would expand it. 

 

Chery is also one of the biggest beneficiaries of the withdrawal of Western car manufacturers from Russia. Industry media estimate that Chery sold around 200,000 cars in Russia last year. 

 

The company also cooperates closely with the Chinese tech group Huawei, which is controversial in the West, for one of its brands.

 

In Spain, however, there were no major reservations. Thanks to the cooperation, the old Spanish brand Ebro is now returning to the car market. The new The traditional company, named after the Spanish river, built trucks, tractors, buses and off-road vehicles in the Zona Franca between 1954 and 1987. Nissan later took over the production facility.

 

Second largest car manufacturer in Europe

 

Spain is now the second largest car manufacturer in Europe after Germany and is focusing particularly on the mass production of small electric cars. Inexpensive green electricity from solar and wind energy, relatively low salaries and plenty of subsidies are helping to build battery factories and production facilities. Most recently, the Chinese manufacturer Envision secured European aid worth 300 million euros for a battery cell factory in Cáceres in the structurally weak Extremadura region. Last year, construction began on the gigafactory of the Volkswagen subsidiary Powerco in Sagunt. Further battery cell projects in Zaragoza (Stellantis) and Valladolid are in preparation. In Cadiz, the Zhenshi Holding Group has taken over the old Airbus facilities to manufacture wind turbines there." [1]

You say, why is there nothing at all in Lithuania? If we don't get Chinese parts for assembling drones in garages, does it mean a crash in Lithuania as a whole? Let's not worry. We, Lithuanians, will first conquer the world, and then "do not disturb the work". We begin with the conquest of China. Look, Landsbergis has already grown a beard, he has two wives at the same time - a real Genghis Khan.

1. Chinas Auto-Offensive in Europa. Frankfurter Allgemeine Zeitung (online) Frankfurter Allgemeine Zeitung GmbH. Apr 20, 2024. Von Gustav Theile, Schanghai und Hans-Christian Rößler, Madrid