Tesla is poised to emerge as a key winner in the face of European protectionist measures. As regulators prepare to take action against rising competition from rapidly growing Chinese players like NIO, BYD, and XPeng, the U.S. electric-vehicle maker stands to benefit.
President Ursula von der Leyen, who leads the executive branch of the European Union, announced on Wednesday that the European Commission is commencing an investigation into electric vehicles originating from China. In her prepared speech, von der Leyen highlighted that the global markets are being flooded with more affordable Chinese electric cars, which are kept artificially inexpensive due to substantial state subsidies. This occurrence has led to a distortion in the market, prompting the Commission to launch an anti-subsidy investigation.
This undertaking appears to be driven by a desire to bolster legacy car manufacturers that form the foundation of the European economy. Companies like Volkswagen (VOW3.Germany), Mercedes-Benz (MBG.Germany), and Stellantis (STLA) have successfully ventured into the realm of electric vehicles. However, they are now facing mounting pressure from their Chinese counterparts.
The Growing Presence of EV Manufacturers in Europe
The European Electric Car Report, published by Matthias Schmidt, reveals an astonishing growth in the registrations of electric vehicles (EVs) from January to July 2023. Among the various manufacturers making waves in Europe, China’s BYD (1211.China) emerges as the single fastest-growing EV manufacturer, experiencing a remarkable 323% increase in registrations during this period.
Interestingly, while Chinese manufacturers witnessed a surge of over 130% in registrations, their European counterparts experienced a relatively modest growth rate of 36%. However, it is worth noting that American manufacturers, such as Tesla (TSLA), achieved an impressive 108% increase in registrations during the same time frame. Notably, Tesla’s prominence in Europe is expected to receive an unexpected boost if the EU implements any protectionist measures arising from its ongoing investigation.
As of July 2023, Tesla’s market share in Europe stands at nearly 19%, reflecting a significant rise of 129% compared to its 12% share during the same period in 2022. This growth is primarily attributed to the success of Tesla’s Model Y, which currently dominates the European market with a substantial 14% annual market share. In comparison, its closest competitor, the Volkswagen ID.4, holds only 5% of the market.
On Wednesday, prior to regular trading hours, Tesla’s stock witnessed a modest increase of 0.5%. Simultaneously, European auto stocks demonstrated upward momentum, while Chinese manufacturers saw a decline, with NIO’s U.S.-listed stock falling by 2.4% and XPeng shares down by 2.8% during premarket trading.
Overall, the EV market in Europe is witnessing rapid expansion, with Chinese manufacturers like BYD showcasing impressive growth rates. At the same time, American powerhouse Tesla continues to solidify its presence and reap the benefits of its market dominance.