Finding the wow factor – How Chinese EV manufacturers can succeed in Europe

Munich, November 2021

Finding the wow factor - How Chinese EV manufacturers can succeed in Europe

Munich/Detroit, November 2021

n recent weeks, the Chinese OEM NIO has been in the news for entering Europe’s EV market via Norway. Eventually, NIO aims to repeat its success in China by expanding into major European automotive countries, including Germany, France, and the UK.

Several other Chinese EV manufacturers such as Aiways and XPeng have also entered Europe or are planning to do so, fueled by their success at home. Yet despite their highly ambitious targets, all these Chinese OEMs apart from NIO are plagued by one common issue. They are widely unknown in Europe.

What works in China may not work in Europe’s EV market

The frequent mistake made by Chinese OEMs is to assume that success at home is replicable abroad. Thus, they take their existing EV portfolio, digital ecosystem and sales model and simply transplant them to Europe, on the basis that what works well in China will work equally well in Germany or other European automotive markets. For example, Chinese OEMs try to completely bypass Europe’s traditional wholesale retail system and use the agent model instead.

Chinese OEMs face other obstacles in Europe. So far, the limited brand recognition achieved by Chinese vehicles has generally been unfavorable, due to safety concerns. Many European customers remember Landwind, the Chinese-built SUV that failed a crash test conducted by the national automobile club ADAC in 2005, causing lasting damage to the image of Chinese cars in Germany.

In early 2021, ADAC conducted another crash test on the Chinese electric car Suda SA01 which is being sold in Germany at a dumping price. The Suda SA01 failed the test with “glaring safety deficiencies”: no airbag, no Electronic Stability Program (ESP), no emergency brake or lane-keeper assistant, and no seatbelt tensioner.

An additional handicap for Chinese OEMs is that European consumers are generally loyal towards traditional brands with persuasive marketing stories, and already have plenty of choice. The lesson here is that OEMs cannot just depend on the quality of the product to generate sales. Nor can they simply rely on dealership groups to do their marketing or to formulate the customer experience.

The WOW factor – a must-have for Chinese EV manufacturers

These issues explain why Chinese EVs remain largely unknown in Europe and difficult for consumers to differentiate, except for the wrong safety reasons. To gain traction in Europe, Chinese EV manufacturers must firstly get the basics right.
As well as offering good-quality vehicles, they need to identify the most important use cases to help them understand the specific requirements of European customers, as compared with Chinese car buyers. The next step is to create brand awareness and reach out to targeted customers via online and offline brand marketing campaigns. During and post-sale, Chinese OEMs must provide a strong customer experience and integrated product offering, with seamless connections between the online and offline world that deliver a holistic ecosystem of services and technology upgrades.
Yet in an increasingly populated European EV market, Chinese OEMs still need one key ingredient to stand out from the crowd – the WOW factor. They have to surprise customers with an offering that European car buyers might never have expected from a Chinese brand, whether it is a product that amazes, a technology solution that astonishes, or an ecosystem that fascinates.
By definition, an OEM’s WOW factor must be unique – Chinese EV manufacturers will get nowhere if they try to imitate Tesla. Instead, they must aim to be the Chinese brand in Europe which rises above both other Chinese and European competitors. Based on the evidence so far, Chinese OEMs have yet to grasp this critical point.
Willy Wang

Principal & Managing Director Berylls China

Willy Wang

Willy Lu Wang (1981) joined Berylls Strategy Advisors in 2017. He started his career participating in the graduate program of Audi focusing on production planning. After stations at another strategy consultancy as well as being the strategy director for a German Tier-1 supplier, he is now responsible for the China business at Berylls.

He has a broad consulting focus working for all clients in China, whether they are JVs, WOFEs or pure local players. He is also responsible for the development of AI and Big Data products dedicated towards the Chinese market further strengthening the Berylls End-to-End strategy and product development capabilities.

Wang studied Electronics & Information Technology with focus on Systems and Software Engineering and Control Theory at Karlsruhe Institute of Technology.