China’s Popular Electric Vehicles Have Put Europe’s Automakers on Notice

Bastian Stark agreed to add MGs to the dealership in north Bavaria where he is general manager. He sold three hybrids before even putting up a sign.Credit...Felix Schmitt for The New York Times

FRANKFURT — The name MG used to be synonymous with spirited but finicky sports cars from Britain. Nowadays the iconic octagonal badge serves a different kind of motoring ambition: China’s push to become a big player in the global auto market.

SAIC Motor, one of China’s Big Four automakers, bought the MG brand in 2007 and is stamping it on a line of electric sport utility vehicles on sale in Germany and other European markets. MG is an example of how Chinese carmakers are exploiting the shift to electric cars to challenge the American, European and Japanese carmakers that have long dominated the industry.

The Chinese automakers are arriving as electric cars surge in popularity, accounting for almost 10 percent of new car sales in Western Europe, and consumers are in a mood to buy, with savings built up during the pandemic. At the same time, car manufacturers are cutting back production because of shortages of microprocessors.

MG already has 350 dealers in 16 European countries and is still expanding. Two other Chinese automakers, Nio and BYD, are moving into Europe by way of Norway, the world’s most electrified large car market.

Nio, based in Shanghai, opened a dealership in Oslo at the end of September, the company’s first outlet outside China. BYD, based in Shenzhen, delivered an electric S.U.V. called the Tang, to the first Norwegian customer in August.

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MG uses parts from suppliers like Bosch, Valeo and Continental.Credit...Felix Schmitt for The New York Times

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The cockpit of the MG Marvel R Electric.Credit...Felix Schmitt for The New York Times

Great Wall Motor, another Chinese manufacturer, has announced plans to start selling a battery-powered compact and a hybrid S.U.V. in Europe next year.

Polestar, which is based in Sweden but belongs to Geely Holding of China, has been selling a Chinese-made battery-powered model in Europe and the United States since 2020. And many of the Teslas on European roads were imported from the company’s factory in Shanghai. (That will change once the company finishes building a factory near Berlin.)

Foreign automakers like Volkswagen, Mercedes-Benz or General Motors sell millions of cars in China, so they can hardly complain when Chinese automakers encroach on their turf. Even though China is the world’s largest car market, its brands have only a sliver of the international market. Even buyers in China prefer foreign brands, although local carmakers are growing quickly and have captured more than 40 percent of the domestic market.

Still, the appearance of Chinese-made autos in Europe is another ominous sign for established carmakers that are already having enough trouble making the transition from internal combustion engines to batteries. The Chinese automakers also have the United States in their sights, although their impact so far has been minimal. Slovakia supplies more cars to the U.S. market than China.

The Chinese carmakers learned the trade from European companies they are now challenging. The Chinese government has long required foreign carmakers to operate via joint ventures with domestic companies, and to share know-how.

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A Volkswagen showroom in Chengdu, China. MG’s compact electric S.U.V. costs less than Volkswagen’s least expensive comparable model, the ID.4.Credit...Sun Yilei/Reuters

SAIC, MG’s owner, has been Volkswagen’s partner in China since 1984. Now MG is moving into Volkswagen’s heartland. MG is advertising its ZS, a compact electric S.U.V., at a starting price of 30,420 euros, or about $35,400. When government incentives for electric vehicles are included, the car can be had for around €24,000. That is €4,000 less than the least expensive version of Volkswagen’s compact electric S.U.V., the ID.4.

“The sous chef is opening his own restaurant,” said Matthias Schmidt, an analyst in Berlin who tracks the European electric car market.

MG said in a statement that its cooperation with Volkswagen remained a “win-win strategic partnership.”

Europe is a notoriously difficult market for foreign carmakers. Just ask Ford Motor, which has only 4 percent of the European Union market, or Toyota, which has a little more than 6 percent despite its heft in the rest of the world.

Earlier attempts by Chinese automakers to break into Europe failed. In 2013 Qoros, a start-up Chinese brand, announced plans for a network of dealerships in Europe but opened only one.