The French automaker, Renault, has put forth a call to action, urging Europe to step up its game in the electric vehicle (EV) market. In an open letter to Europe, Renault boss Luca de Meo voiced his concerns about the impending “onslaught of electric vehicles from China” led by BYD, the Chinese EV giant.
Rallying Europe for an EV Revolution
De Meo’s solution lies in history. He calls for a European fund akin to the Marshall Plan, a historical precedent set in the wake of World War II when the U.S. Congress passed the Economic Cooperation Act. This act funneled $12 billion across 16 countries over three years to rebuild Western Europe.
De Meo suggests that a similar plan could accelerate the adoption of EVs, reduce CO2 emissions, and fend off competition from the East. With the EV market at an inflection point, the transition from early adopters to the mass market becomes crucial.
However, this transition has proven to be a challenge, with factors such as falling gas prices and inadequate infrastructure contributing to the reluctance of the mass market to shift from internal combustion engines to EVs.
The BYD Threat Looming Over Europe
The threat posed by BYD, a Warren Buffett-backed Chinese automaker, is palpable in de Meo’s letter, with China being mentioned 23 times. BYD’s advantages include state-backed subsidies and complete control of its battery supply chain, which significantly reduces costs.
De Meo highlighted that a C-segment car in China enjoys a cost advantage of between €6,000 and €7,000 ($6,500 and $7,600) compared to its European equivalent. This has facilitated BYD’s inroads into the European market, with plans to build a manufacturing plant in Hungary and the ability to ship 7,000 BYD cars to the continent in specially designed EV cargo ships.
Challenges for BYD’s European Advance
Despite the strides made by BYD, their advance in Europe is far from assured. They would have to navigate around European drivers’ brand loyalty, higher labor costs, and potential legislative clampdowns.
In fact, the EU has already launched a probe into BYD for potentially anti-competitive Chinese subsidies, leaving carmakers in a “state of shock.” However, de Meo emphasized the importance of maintaining relations with BYD, as it has become a significant trading partner for some of Europe’s largest economies.
In his words, “Completely closing the door to them would be the worst possible response.”
This call to action by Renault’s boss underlines the urgency of the situation and the need for Europe to accelerate its transition to EVs.
With BYD ramping up its efforts, the time is ripe for a European “Marshall Plan” for EVs to counter this challenge and take the lead in the global EV market.
