Xpeng hopes to bring “the best technology” to Europe as the EU finalizes tariffs

However, the CEO of one of China’s leading electric vehicle startups argues that the industry’s success is due to intense local competition, not state support. “It was rumored that there were close to 500 (Chinese) electric vehicle startups probably seven to eight years ago. Now, (we’re left with) less than 10 percent of those names still in business,” Brian Gu, co-president at Chinese electric vehicle startup Xpeng, said Wednesday at a conference in Berlin, Germany.

Domestic Chinese competition has created a “very efficient” and “very innovative” industry, Gu argued, which is now thriving in global markets.

As developed markets in Europe and North America consider new tariffs and controls on electric vehicles made in China, Gu said Xpeng wants a level playing field for its cars. The company is aggressively expanding overseas, with Xpeng currently selling in about a dozen European markets.

“We want to bring to European customers the best technology that has (been) developed in a highly competitive and iterative Chinese market,” Gu claimed. The auto executive dismissed fears that Xpeng is undercutting established automakers, noting that the startup’s cheapest model sold in Europe sells for a similar price to Tesla’s Model Y.

Other Chinese EV executives also argue that fierce local competition, rather than state support, is driving the global success of China’s EVs. Earlier this year, BYD Europe president Michael Shu claimed that “management efficiency,” rather than government subsidies, explained the EV giant’s low prices.

On Tuesday, Xpeng reported deliveries of 21,352 vehicles in September, a record monthly sales level for the EV startup. The company delivered 46,533 cars in the third quarter, up 16 percent year-on-year.

Xpeng generated revenue of 8.1 billion yuan ($1.1 billion) for the quarter ended June 30, a 60 percent increase from the same period last year. However, the startup reported a net loss of 1.28 billion yuan ($180 million) for the quarter ended June 30. Xpeng has yet to release results for its most recent quarter.

Entrance fees

However, Gu and his colleagues have an uphill climb to change the narrative about Chinese electric vehicles.

The European Union is likely to vote on Friday to finalize additional tariffs of up to 35.3 percent on electric vehicles made in China, on top of the existing 10 percent tax on imported cars.

Some governments, such as Germany and Spain, have asked the European Commission to reconsider the new taxes. German car brands such as BMW, Volkswagen and Mercedes Benz have a significant presence in the Chinese market; all criticized the tariffs, citing the need to avoid a trade conflict. (Volkswagen is partnering with Xpeng on EV platforms, software and supply chain management)

However, there is enough support among EU member states to push through the new trade protections, Reuters reported on Wednesday. citing unnamed officials.

Businesses also fear that European tariffs could evolve into a new trade war with China. Shortly after the European Commission announced its EV probe last year, Beijing launched an anti-dumping investigation into European spirits. Chinese officials launched a similar investigation into European pork after the EU unveiled tariffs on electric vehicles.

However, German Vice Chancellor Robert Habeck, who joined Gu at Wednesday’s conference, believed both Europe and China could reach an amicable deal.

Beijing has made a proposal for a “political solution to this conflict,” Habeck claimed. The German minister called for the EU to be “open”, even if it is “a little late”.

Talks between Beijing and Brussels could continue regardless of Friday’s vote. Both governments will have until the end of the month to negotiate a solution.

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