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1、09 May 2023Allianz ResearchPhoto by Tom Radetzki on Unsplashto the European The Chinese challenge 19Appendix13Mapping the Chinese challenge for the European automotive industry04Electric vehicles:Reshuffling cards in the global automotive game?automotive industry Allianz Research The shift to batter

2、y electric vehicles is a game changer for the European automotive industry.Alternative energy vehicle sales reached a record-breaking 4.4mn units in 2022,representing 47%of all new vehicle registrations in Europe.Battery electric vehicles(BEVs)led the way,with sales booming by+28%,representing 12%of

3、 all new vehicle registrations.With the 2035 phase-out of internal combustion engines(ICE)looming,the automotive sector is on the cusp of a complete shake up,facing a transformation of its supplier base,changing customer needs,competition from new entrants and the reality of a less car-centric socie

4、ty.But the number one risk is China.Having recognized the potential of electric vehicles 15 years ago,China has since invested vast resources in building a competitive electric vehicle ecosystem.As a result,it now leads the global EV landscape,selling over double the number of BEVs in 2022 compared

5、to Europe and the US combined,while also holding a competitive edge in nearly all aspects of the BEV value chain.Because they account for more than 80%of EV sales in their country,Chinese brands have seen their market shares climb from less than 40%in 2020 to close to 50%in 2022,while the countrys a

6、utomotive trade balance went from a-USD31bn deficit to a+USD7bn surplus over the same period.At the same time,already in 2022,three of Europes best selling BEVs were Chinese imports.As BEVs eventually grow to account for all new car sales in Europe,Europe-made cars are likely to be substituted by th

7、ose made in China irrespective of whether they are manufactured by a Chinese,American or European company.European carmakers could collectively lose more than EUR7bn in annual net profit by 2030.If Chinese manufacturers increase their domestic market shares to 75%by 2030,total sales in China by Euro

8、pean carmakers would fall by-39%,with local production falling from an estimated 4.4mn units to 2.7mn in 2030.We also find that if European imports of China-made cars reach 1.5mn vehicles in 2030,equivalent to 13.5%of the EUs 2022 production,the value added impact on the European economy would stand

9、 at EUR24.2bn in 2030 for the automotive sector,the equivalent of 0.15%of the regions 2022 GDP.But the automotive-dependent economies of Germany,Slovakia and Czech Republic could face an even bigger hit(0.3%to 0.4%of GDP).What can policymakers do?Given the strategic importance of the automotive sect

10、or for the European economy,policymakers could seek reciprocal trade terms with China and the US,as well as promote BEV adoption through improved charging infrastructure.Moreover,allowing Chinese investment in local car assembly could have more value added generated in the region,while increasing se

11、lf-sufficiency in raw materials critical for battery manufacturing and investing in next-generation battery technologies will further help Europes automotive sector prepare for tomorrows challenges.2SummaryExecutiveAurlien DuthoitSenior Sector Advisoraurelien.duthoitallianz-09 May 20233Photo by Lore

12、nzoi Geroza on UnsplashAllianz Research4Electric vehicles:Photo by Lenny Kuhne UnsplashReshuffling cards in the 2022 was a record-breaking year for alternative energy vehicles in Europe,with sales soaring to 4.4mn units(+11%vs 2021)despite an overall-5%decline in new vehicle registrations.Between 20

13、19 and 2022,the market share of alternative energy vehicles climbed from 11%to 47%(Figure 1).Facing a potential ban on selling internal combustion engine cars(ICEs)by 2035 and targets to cut emissions,carmakers have introduced a record number of new models in Europe.At the same time,consumers are in

14、creasingly seeking out less polluting options,and the government subsidies for low-emission vehicles are boosting demand further.global automotive game?Battery electric vehicles(BEVs)in particular are leading the way,with sales booming by+28%and now representing 12%of all new vehicle registrations,f

15、ar above the 6%reached in the US.Europe is decarbonizing its automotive industry at a record pace09 May 2023Electric vehicles:5Figure 1:EU new vehicle registration by fuel type(%)Sources:ACEA,Allianz Researchglobal automotive game?Box 1:How the shift to electric vehicles is reshaping competition in

16、Europe Despite its success,Europes approach towards alternative energy vehicles represents a risky gamble for its domestic car industry.It entails a complete shakeout of the sector by transforming its supplier base,changing the needs of its customers,leaving the door open to new entrants,redefining

17、the competitive game and preparing for a less car-centric society(Box 1).The stakes are high for Europes automotive industry:four out of five cars sold in Europe are assembled locally(i.e.the coverage ratio is higher than 80%).Europe is also the worlds export powerhouse in the sector,with car trade

18、generating between EUR70bn and EUR110bn in trade surplus for the European economy every year over the past decade.Along with Japan and South Korea,the region dominates global car exports,serving the trade deficits of major economies such as China and the US.At a macro level,the automotive sector is

19、Europes largest single industrial sector,accounting for 10%of the value added of the manufacturing industry,with even higher percentages in countries such as Germany(15%),Hungary,Czech Republic and Slovakia(close to or above 20%).The industry also has a strong impact on upstream industries such as m

20、etals,plastics and electronics.The impact of electrification on the automotive industry in Europe is significant and far-reaching,affecting every aspect of the industry.Using Michael Porters framework identifying the five forces shaping the intensity of competition within an industry,we outline belo

21、w how the shift to EVs is reshuffling the competitive game for the European automotive ecosystem.Relationships with suppliersHistorically accounting for 25%to 30%of a cars total cost,powertrain components(engine,transmission,exhaust and fuel systems etc.)are by definition the most impacted by the sh

22、ift to electric vehicles.Electric powertrains are typically much simpler,requiring considerably less parts(no fuel tank and injection systems,no exhaust system,generally a single-speed transmission etc.),but far more expensive(30-40%of total vehicle cost),with batteries alone representing 20-30%of t

23、he total vehicle cost.Technology substitution has so far been the most obvious and critical challenge for the European ecosys-tem,with providers of legacy technologies(turbo-compressors,fuel injection systems,exhaust systems)facing an existenti-al threat.The shift away from diesel engines is particu

24、larly notable as Europe was the only major market where passenger cars used to run on diesel,creating a natural barrier to foreign competition more used to petrol engines.While carmakers are learning to work with new suppliers,increasing supplier concentration is becoming a cause for concern:Six out

25、 of the 10 largest battery manufacturers are based in China and control about two-thirds of the global market.The strategic import-ance of the battery has prompted some carmakers to invest heavily in their own capacities,most often through partners-hips with specialized players.0%20%40%60%80%100%201

26、92022PetrolDieselHEVBEVPHEVNGVOtherAllianz Research6Relationships with customersElectrification is also reshaping the industrys relationship with its customers in particular,fleet customers(car rental and corporate leasing companies),which account for over 50%of all car registrations in Europe.Becau

27、se they have their own ESG agendas,rental and leasing companies have committed to reduce their carbon footprints and abide by Europes gro-wing regulation.In this respect,carmakers failing to adapt to the changing needs of fleet customers face the risk of losing market share in the near future.Threat

28、 of new entrantsElectrification is a major opportunity for aspiring new entrants,whether they are starting from scratch(hundreds of electric vehicle companies have been launched in the past years)or moving from ICEs to electric powertrains to increase their mar-ket shares.The threat of new entrants

29、has already materialized in Europe:While Tesla was virtually unknown in the market 10 years ago,it now has a 2%share of the overall European market and a 20%share of the battery electric vehicle segment.After making a strong impression at the 2022 Paris Motor Show,Chinese carmakers are also ramping

30、up their commercial presence in Europe and bringing new models to the market.Threat of substitutesIrrespective of their powertrain technologies,private vehicles are expected to play a lesser role in the European transport mix in coming years.Governments are likely to enact additional policies and re

31、gulations that will make owning and using private cars less appealing(restrictions on their use in urban areas,greater incentives for public transport and alternative mobility options),thereby reducing overall demand for new vehicles.Competitive rivalryCars are complex consumer goods,with competitio

32、n based both on prices(value for money)and differentiation(perceived attributes)analysts often distinguish between the low cost,mass market,premium,performance or luxury segments.Here again,electrification is a game changer as regards non-price competition by challenging the traditional features on

33、which carmakers and brands have built their competitive advantages:Performance:Electric cars are redefining performance because of the characteristics of electric engines.Of all charac-teristics,range is arguably the most critical because of the comparatively low performance of EVs vs ICEs and the s

34、ubs-tantial gap between entry-level and high-end EVs as regards maximum range.Potential range needs to be considered together with charging speeds,charging infrastructure compatibility and energy efficiency.Carmakers lagging behind competition in terms of performance face the risk of losing market s

35、hares.Reflecting the potential advantage from a comparatively wider and faster charging network,carmakers have already invested billions in proprietary charging infrastructure in Europe.Design:Electric vehicles look similar for a reason in particular,positioning the battery on the floor allows cars

36、to have a low center of gravity and optimal weight distribution at the cost of a generally higher stance compared to ICEs,coming on top of higher ground clearance to protect the battery from potential shocks.To compensate for the adverse impact on vehicle aerodynamics and performance,EVs often have

37、a slick look to reduce air resistance.Overall,car design may make less of a difference than it used to until the industry comes up with battery designs that allow greater flexibility.Reputation and brand image:The extent to which carmakers and their brand portfolio can continue to leverage attri-but

38、es built over time with ICEs while selling EVs remains to be seen.Common values used by carmakers include perfor-mance,technology,reliability,safety and design as discussed above,those product attributes are being challenged by the adoption of electric technologies.Anecdotal evidence from the Chines

39、e market shows consumers are willing to pay prices more typical of foreign,premium vehicles from well-established brands for high-performance vehicles from companies with little to no brand history.The fact that the vast majority of carmakers are coming up with new car names for the successors to th

40、eir historical ICE models,and sometimes with new car brand names,also suggest that electrification really is a game changer for reputation and brand image.Because of new entrants,competitive will increase in the coming years,forcing carmakers to invest even more to better dif-ferentiate their cars.M

41、eanwhile,price competition will also intensify as electric vehicles will no longer be a niche segment commanding a substantial price premium to the standard offering.09 May 20237Despite its rapid growth,Europes adoption of alternative energy vehicles comes only second in the world and a distant seco

42、nd at that.In 2022,more than 5.4mn battery electric vehicles two-thirds of the world total were registered in China,+83%from 2021.Alternative energy vehicles account for 20%of total registrations(Figure 2).Figure 2:Battery electric vehicle registrations in top markets(2022)Sources:ACEA,CAAM,Allianz

43、Research.China is doubling down on electric vehiclesMuch like in Europe,soaring EV penetration reflects a mix of growing consumer interest in electric cars,national and regional purchase-subsidy schemes and new models coming to the market,covering the city and compact-car segments.Box 2:40 years pla

44、ying catch-up with international competition Chinas oldest carmakers trace their roots back to the 1950s and 1960s but only gained traction in the 1980s when,follo-wing the example set by South Korea,they began to learn from foreign firms through the assembly of knock-down kits sup-plied by European

45、 and US automotive companies.The 1994 Industrial Automotive Policy went further by allowing greater foreign investment in the sector with the possibility for international manufacturers to have a maximum of two 50:50 joint ventures with a domestic manufacturer.The policy was well received by foreign

46、 investors,with Japanese,European and US companies investing massively and helping propel domestic production from 1.4mn vehicles in 1994 to 13.8mn in 2009,the year the country overtook Japan and the US as the worlds largest producer of motor vehicles.However,for all their success in boosting local

47、production,and despite technology transfers and substantial import tariffs(25%)on foreign vehicles,in the early 2010s,Chinese carmakers still suffered from a significant technology and quality gap,translating into a USD25bn trade deficit and foreign competitors controlling 70%of domestic car registr

48、ations.Electric vehicles were identified as the future competitive battleground in the late 2000sChinese authorities recognized the potential of EVs to address other critical issues such as air pollution and energy security.But support to EVs was also clearly identified as a major opportunity for th

49、e domestic industry to leapfrog from being a tier-two country in legacy engine technologies to a leader in alternative energy technologies.A major milestone was a pilot program launched in 2009 called“Ten Cities,Thousand Vehicles“encouraging the adopti-on of EVs and the development of the domestic E

50、V industry by providing financial incentives for EV buyers,encouraging government fleet purchases,supporting the development of charging infrastructure and promoting research and develop-ment in EV technology.Initially rolled out in five cities,the pilot was found promising,progressively extended to

51、 more cities and ultimately implemented nationwide.By placing a specific emphasis on the development of what it called“new energy vehicles”(hybrid electric,battery electric,fuel cell vehicles),the 12th five-year plan(2011-2015)and the 2015 Made in China 2025 plan have also been instrumental in shapi

52、ng the current Chinese EV ecosystem.Much like for the other nine critical industries identified,the objective was to move away from low value-added manufacturing and to increase the share of Chinese inputs in exported goods through of mix of financing and fiscal tools favouring domestic companies.Th

53、e plan initi-ally set non-binding objectives of 1mn new energy vehicles to be produced by 2020 and 3mn by 2025,bringing the share of new energy vehicles to 20%of all vehicles sales.All three targets were met in advance in 2017,2021 and 2022,respectively.0%5%10%15%20%25%0123456ChinaEUUSUnits(million,

54、LHS)%of registrations(RHS)Allianz Research8.and recapturing the domestic marketChinas rapid advancements in electric vehicles are transforming its domestic market,where foreign auto-makers have traditionally held a dominant position.In a historic first,Chinese automakers reached parity with foreign

55、brands in 2022 and surpassed them in Q4,cap-turing 51%of the market share(Figure 3).Their share in electric vehicles alone stood at 80%and showed no sign of abatement in Q1 2023.The main factors explaining the growing popularity of Chinese brands in the Chinese market include:A strong cost advantage

56、 for BEV manufacturing ba-sed on the bigger volumes of the Chinese car market and a competitive supplier base(critical metal refi-ning,battery cell and module manufacturing etc.).Past purchase-subsidy schemes were also restricted to China-made vehicles.A wider range of available BEVs(city and compac

57、t cars in particular)compared with international compe-titors,which have so far mostly focused on large and expensive sedans and sport utility vehicles.Chinas most popular BEV is a four-seat city car manufactured by a US-Chinese joint-venture that is available for the equivalent of EUR4,300.Positive

58、 product reviews and customer reception for China-branded EVs resulting in good brand recog-nition,in contrast to the more negative perceptions associated with Chinese internal combustion engine vehicles in the past.Figure 3:Battery electric vehicle registrations in top markets(2022)Sources:CAAM,All

59、ianz Research0%10%20%30%40%50%60%2000212022Market share of Chinese carmakers in passenger car registrationsMarket share of NEV in total sales09 May 20239Figure 4:Chinese registrations of imported European vehiclesSources:Bloomberg,Allianz ResearchAs the popularity of electric v

60、ehicles grows,Chinese companies are expected to expand their market share accordingly by 2030 and squeeze foreign car imports.Because they represent more than half of Chinas car imports,European automakers face the greatest risk.European trade figures can be somewhat deceptive exports did hit a reco

61、rd high of EUR24bn in 2022,but this surge was mainly due to a catch-up effect and favorable pricing.Analyzing Chinese car registration data for imported models from major European automakers tells a different story:Imported volumes have been declining in recent years,dipping below 500,000 in 2022(Fi

62、gure 4).Over the past decade,the market share of European imports has dropped from an estimated 2.9%to 1.8%of total registrations.putting EUR24bn of European car exports at risk0%1%2%3%4%-200,000 400,000 600,000 800,0002000022Imports(unit,LHS)%of registrations(RHS)an

63、d more than 4mn vehicles from Sino-European joint-venturesThe surging popularity of Chinese pure-play automakers is also jeopardizing the operations that European carmakers have established in China mostly joint ventures,but also a few majority-controlled subsidiaries.Accounting for 85%of European a

64、utomakers sales volumes in the Chinese market,local subsidiaries have generally lagged in adopting electric vehicle technology compared to their pure-play counterparts:Of the 20 most popular electric vehicles sold in China in 2022,only one is manufactured by a Sino-European joint venture.In the face

65、 of flat,then declining market shares(Figure 5),European carmakers have taken opposite stances,considering the Chinese market too difficult to crack and withdrawing entirely,or conversely doubling down on local manufacturing to improve local competitiveness.Allianz Research10The growing competitiven

66、ess of Chinas automotive industry is best reflected in its bilateral automotive trade with the rest of the world.Looking at product-level data provided by Chinese customs,we find confirmation that Chinese car imports fell from 1.2mn units in 2017 to 0.9mn units in 2022 a-30%drop in a market down by

67、only-6%.Even more striking,the trade balance in value terms went from a USD37bn trade deficit to USD7bn trade surplus over the same period,showing that rising Chinese competitiveness is not only allowing the country to become more self-reliant,but also to expand in international markets(Figure 6).Fi

68、gure 5:Chinese registrations of locally manufactured European vehiclesSources:Bloomberg,Allianz Research estimates0%10%20%30%02462000022Locally manufactured vehicles(million units,LHS)%of registrations(RHS)Trade data shows growing Chinese competitiveness in internati

69、onal markets While Chinese manufacturers used to focus on the needs of other emerging economies in Asia,the Middle East and Latin America,it is European markets that contributed the most to booming exports,jumping from an estimated 8%share of exports in 2017 to a 28%share in 2022.Looking at European

70、 statistics to check for consistency,we find confirmation of a significant boom in imports of China-made cars,with,for the first time ever,Europes vehicle trade balance moving into negative territory in December 2022.Figure 6:Chinas automotive international trade(billion USD)-10 2011 2

71、012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022ImportsExportsTrade balanceSources:China Customs,Allianz Research09 May 202311To assess the penetration of China-made cars at a micro-level,we study the best-selling vehicles of 2022 for Europes largest automotive market,Germany(Box 3).Looking at

72、their respective countries of assembly,European and American carmakers are pushing made-in-China cars in Europe we find that three out the 10 best-selling BEVs were fully or partially imported from China,and just five models from four European and American carmakers dominate registrations of China-m

73、ade BEVs in Europe.while most Chinese brands are only ramping up their operations.Only one China-branded BEV made it to Germanys top 50 best-selling models in 2022:Most Chinese carmakers are still at an exploratory stage in Europes largest automotive market.Looking more closely at data for Q1 2023,h

74、owever,we find that progress is clear,with six Chinese companies now selling BEVs in Germany compared to only two one year ago,and the market share of those companies now accounting for 3.7%of all BEV sales in Germany,vs 1.2%one year ago.With Chinese players accounting for 15 out the 90 BEVs availab

75、le in the German market,sales are poised to grow at a fast pace in 2023 and in coming years.Tapping into a new market in the automotive industry requires time as carmakers must navigate through typical ramp-up phases including regulatory compliance,localization,establishing sales networks with impor

76、ters and dealerships and building brand awareness.Box 3:Mapping the current BEV offering in Germany,Europes largest car market#1 EVs available from city to sports cars through SUVs and compacts.As of March 2023,90 different models were avai-lable for order in Germany,priced between EUR22,000 and EUR

77、218,000.Half of them are compact cars or smaller.#2 Only a fraction of available models are EVs.EVs are sold under 37 different brands,meaning the average brand offers two to three different electric models.Brands affiliated with dominant automotive groups in Europe tend to have a broader offering.#

78、3 New technology means new entrants.Out of the 37 brands,nine offer battery electric vehicles exclusively in Europe and had little to no commercial presence in the market 10 years ago.#4 New entrants mean new origins.Five full-electric brands are Chinese,three are American and one is European with a

79、 parent Chinese group.19 out of the 90 cars are exclusively assembled in China,and another 11 have assembly operations both in China and Europe or North America.#5 Many Asian-imported EVs among best-sellers.Out of the 10 best-selling EVs in Germany in 2022,one is imported from South Korea,one from C

80、hina and two both manufactured in Europe and North America as well as China.#6 EVs come with a high price tag.The median price tag for one of the 90 EVs available stands at EUR51,000 compared with an average EUR30,000 to EUR40,000 for a new vehicle in Europes largest markets.Affordability will be cr

81、ucial to meet EV penetration targets by 2035.Allianz Research12Box 4 How the US Inflation Reduction Act(IRA)makes Europe a target for Chinese exportsA key reason for the growing penetration of China-made and China-branded vehicles in Europe is its comparatively greater openness for imported electric

82、 vehicles.Despite being the worlds second-largest market for motor vehicles and running a huge trade deficit for cars,the US is set to be a much tougher market to crack for Chinese vehicles in light of the US Inflation Reduction Act(IRA),which will greatly encourage automotive manufacturing in North

83、 America through two main provisi-ons:Production tax credits for the manufacturing of a wide range of clean energy components and critical minerals(“New Advanced Manufacturing Production Tax Credits”)including electric battery cells and modules used in electric vehicles.Tax credits worth up to USD7,

84、500 for the purchase of an EV assembled in North America and meeting certain domestic content requirements for minerals and components and,starting in 2024,exclusive to so-called“entities of concern”(including China).While the former provision will only play out progressively as domestic and foreign

85、 companies invest in local manufacturing capacities,the latter is creating a strong and immediate advantage for locally assembled vehicles and an explicit barrier to Chinese suppliers and carmakers.IRA provisions come on top of a significant import duty gap:Chinese vehicles face a 10%import duty rat

86、e in Europe but a 27.5%rate inherited from the Trump Administration in the US.Chinese competition will pave a bumpy road for Europes automotive industryWe identify two main channels by which Chinas rise as a competitive automotive manufacturing hub could impact Europes automotive industry:Growing co

87、mpetitiveness will help Chinese manufacturers gain a greater share of their domestic markets,jeopardizing the sales and profits of foreign companies operating in China,either through lower exports or lower sales from their Chinese subsidiaries.As evidenced by the 80%market share controlled by Chines

88、e brands in Chinese electric vehicle registrations,most international competitors have been too slow to embrace the shift to EVs in China.Looking at their announced EV pipelines for the Chinese market,we observe that only a handful of carmakers are planning increasing commitment to the Chinese marke

89、t.As scale and technology help EVs reach price parity with ICEs over time,we do not see a business case for a foreign carmaker selling substantial volumes of ICEs in the country.Rather,we would expect more international carmakers to withdraw from China in coming years a trend already at play.The man

90、datory shift to a product mix where battery electric vehicles will account for virtually all new car sales by 2035 in Europe will favour a partial substitution of Europe-made cars by China-made cars irrespective of whether those cars are manufactured by a Chinese,American or European company.A look

91、at the product pipelines of European and American carmakers point to a minimum of 11 new mass-market,China-made BEVs to be launched in Europe by 2025,and an additional three Chinese carmakers have announced they will begin commercial operations in Europe as early as 2023,bringing the total to nine.A

92、s discussed in Box 4,the openness of the European market makes it far most interesting for Chinese exports than the American market.09 May 202313Photo by Obi Pixel7Propix on UnsplashMapping the Chinese challenge for the European automotive industryTo help quantify the stakes at play,we simulate a po

93、ssible 2030 scenario where Chinese manufacturers manage to increase their domestic market shares to 75%consistent with the trend at play since sales of new energy vehicles began to soar and our expectations of foreign competitors leaving the market.Meanwhile,imports from China climb to 10%of all car

94、 sales in Europe as the continent goes electric,with BEVs reaching an 80%market share for all passenger car sales.Exports are first pushed by international carmakers with a manufacturing foothold in China,then by Chinese What if Chinese brands capture 75%of their domestic market and China-made cars

95、10%of the European market by 2030?competitors that are finished building their commercial presence in Europes largest markets.The precedents from Japanese carmakers in the US in 1970s(Box 5)or South Korean carmakers in Europe in the 2000s(Box 6)show exports alone can be enough for competitive carmak

96、ers to secure a significant market share in international marketsWe emphasize that this scenario is not a forecast but rather a plausible case to illustrate potential developments in the automotive industry.Various factors,including changes in government policies and geopolitical influences,could si

97、gnificantly impact the actual outcome.Allianz Research14In this scenario,total sales in China from European carmakers would fall by-39%,with local production falling from an estimated 4.4mn units in 2022 units to 2.7mn units in 2030,and exports from 480,000 to 290,000 units.The impact in euro terms

98、would be more difficult to assess as European carmakers do not report operating or net profit on a geographical basis.However,their combined Chinese sales amounted to about 22%of their global deliveries.Assuming their operations in China are as profitable as those in other markets,22%of their combin

99、ed EUR67bn in net profit for 2022 brings the net profit at risk to EUR14.7bn.Because 50-50 joint ventures still account for the bulk of their local sales,at least EUR7.3bn of that EUR14.7bn can be attributed to European carmakers.European car production in China could decline by 1.7mn vehicles(-37%)

100、and threaten EUR7bn in annual net profits and Chinese imports could climb to 1.5mn vehicles and threaten 13%of European productionIn the same scenario,Chinese exports would reach 1.5mn vehicles in 2030,equivalent to 13.5%of the EUs 2022 production or the combined output of the regions three largest

101、automotive assembly factories.Since the European market is by and large autonomous,rising Chinese imports would take a bigger toll on local production compared with competing but modest imports from Japan and South Korea.Greater reliance on imports would lower the capacity utilization rates of Europ

102、ean factories,weigh on their profitability and encourage further capacity eliminations.Over the past 10 years,a dozen assembly sites were shut down in Europe,reflecting greater consolidation among carmakers and the exit of some American and Japanese manufacturers.EUR24bn in direct automotive value a

103、dded at risk,0.15%of the regions GDPAdding export losses to domestic production losses,and factoring in EUR14,200 of value added per vehicle manufactured in EU in 2019 as a proxy,the value added impact on the European economy would stand at EUR24.2bn in 2030 for the automotive sector,the equivalent

104、of 0.15%of the regions 2022 GDP.This EU average masks important value added concentration in just a few countries and regions.Breaking down European value added by country,we are reminded that Germany is the regions powerhouse,alone accounting for nearly 60%of the regions value added(Figure 7).09 Ma

105、y 202315Figure 7:Value added from the European automotive industry by country(2019 data,%)Sources:Eurostat,Allianz ResearchFigure 8:Lost automotive value added expressed as a percentage of 2022 GDPSources:Eurostat,Allianz ResearchIn this respect,the same 0.15%impact on European GDP has a very differ

106、ent meaning for countries where the automotive industry plays a comparatively larger role in 0.0%0.1%0.2%0.3%0.4%0.5%Slovakia Czechia Germany SwedenPolandSpainItalyFrancethe economy the impact would be more than twice the European average for countries such as Slovakia,Czech Republic and Germany(Fig

107、ure 8).and a good dozen more among suppliers of the automotive industry Our estimate on the direct impact on the automotive industry does not factor in the strong knock-on impact the industry has on other industrial and services activities.Using the OECD Trade in Value Added(TiVA)database,we find th

108、at final demand generated by the European automotive industry generated EUR155bn of value added for other European sectors in 2018,of which:EUR53bn was for other manufacturing activities,including EUR19bn for metals,EUR8bn for machinery and equipment,EUR7bn for rubber and plastics,EUR5bn for electro

109、nic and electrical equipment and EUR4bn for chemicals.EUR102bn for services,including EUR16bn in support services(R&D,consulting etc.),EUR12bn in transport and storage services,EUR4bn in IT services etc.(Figure 9)58%6%6%5%5%4%3%2%11%GermanyItalyFranceSpainCzechiaSwedenPolandSlovakiaOthersAllianz Res

110、earch16Figure 9:Value added from the European automotive industry for selected other European sectors(2018 data,billion euros)Sources:OECD Trade in Value Database,Allianz ResearchBox 5:The rise of South Korean brands in the European market The South Korean motor vehicle industry grew in the 1960s,wi

111、th the initial impulse coming from the 1962 Automotive In-dustry Promotion Law.Through a mix of trade policy and government-supervised licensing agreements and joint ventures,domestic carmakers emerged by assembling semi-knocked-down parts provided by Japanese and American carmakers.Government suppo

112、rt was later instrumental to increase the share of domestic content in locally assembled vehicles which materialized in the 1975 by the launch of the first Korea-designed(with international partners)and manufactured passen-ger car and to encourage exports to North America and Europe in the 1980s.Sou

113、th Korean brands became mainstream in Europe in the second half of 1990s with the promise of affordable vehicles whose quality became close to the local entry-level offering.After going through consolidation in the aftermath of the 1997 Asian crisis,they managed to secure an estimated 4%share of the

114、 European passenger car market in 2005 just through ex-ports.In the middle of the decade,they took major steps by opening European research and design centers,designing ve-hicles specifically for European customers and opening manufacturing facilities in Czech Republic and Slovakia.Combined with eff

115、orts to move upmarket and substantial investment in marketing,their strategy was met with commercial success,with their markets shares increasing gradually and reaching an all-time high of about 9%in 2021.Exports are estimated to account for over 40%of South Korean cars sold in Europe and were at re

116、cord highs in 2022,partly driven by popular electric vehicle models primarily assembled in South Korea.055Wholesale andretail trade;repair of motorvehiclesBasic metalsand fabricatedmetal productsTransportationand storageProfessional,scientific andtechnicalactivitiesRubber andplasticsprodu

117、ctsIT and otherinformationservicesChemical andchemicalproductsComputers,electronic andelectricalequipmentEliminating the same 14%of lost automotive production on the value added generated by the automotive industry in other sectors would amount to an extra EUR21bn in lost value added for the Europea

118、n economy.Note,however,that this is an upper bound estimate,given that some services such as retail are provided irrespective of the actual place of car assembly.Conversely,because supply chains tend to be local,lost car assembly activities would be felt more on upstream industries(metals,plastics,c

119、hemicals,electronics etc.).09 May 202317Figure 10:Sales of Japan-branded cars in the USSources:BEA,Jama,Allianz ResearchBox 6:Japans foray into the American market Japan began exporting passenger vehicles to the US in the late 1950s,but it was not before the end of the 1960s that Japa-nese manufactu

120、rers grabbed a sizable share of the local market.A major turn of event was the 1970 Clean Air Act,which set forth a mandatory 90%cut in polluting emissions from new cars by 1975.Together with soaring gasoline prices in the wake of the 1973 oil crisis and the subsequent economic recession,this shift

121、in legislation provided a huge boost to Japane-se carmakers whose lighter,more compact and fuel-efficient vehicles proved popular among US customers.Their share in US registrations jumped from 3%in the 1970s to 7%in 1975 and 20%in 1980 despite imports tariffs and no local manufactu-ring presence.Mea

122、nwhile,US employment in the motor vehicles and equipment sector fell from a high of 1.1mn in 1979 to a low of 650,000 in 1982.The implementation of so-called voluntary export restraints at the request of the US Administration in 1981 contributed to cap Japanese car exports and encourage the creation

123、 of“transplant”factories owned by Japanese carmakers on Ameri-can territory starting in 1982.The move did not prevent Japanese cars from becoming even more popular,with their market share oscillating between 19%and 25%through the decade.Japanese manufacturers invested heavily in their American manuf

124、acturing facilities.By the end of the decade,vehicles assembled locally accounted for nearly 40%of Japanese car sales in the country and employment returned to about 80%of its past peak.0%10%20%30%40%01,000,0002,000,0003,000,0004,000,0005,000,0006,000,000284198619881

125、990622004200620082001620182020Exports to US(units)Overseas production in US(units)%US market(rhs)Photo by Vlad Tchompalov on UnsplashAllianz Research18See Transport in a zero carbon EU:pathways and opportunitiesIn an industry characterized by long product-development

126、 and commercial cycles,it is clear that Chinas lead in the global EV race will not be bridged by 2030.However,the extent to which Europe can keep pace with growing Chinese competition is up to European policymakers and the industry itself:As explained previously,Europes BEV market is comparatively f

127、ar more open than those of China and the US,where national or regional assembly is a pre-requisite to qualify for purchase subsidies and import duties on foreign vehicles are higher.Seeking reciprocity in trade terms,not just with China but also the US,should be a priority to have a more level playi

128、ng field for the European industry.Because Chinas cost advantage lies in part in the size of its domestic market,Europe should also ensure the best possible environment for the adoption of BEVs not just through subsidies,but also with extensive and high-performance charging infrastructure that would

129、 allow electric vehicles to use smaller,lighter and less expensive batteries.Well-performing charging infrastructure would lower the price tag for the average BEV and convince users in less urbanized areas to make the switch.In our previous report,we estimated the necessary investment in charging in

130、frastructure at EUR13.4bn per year to meet Europes Fit For 55 target.If Europe struggles to compete with China the short run,it could seek to join it much like the US did with Japanese carmakers in the 1980s,if only too late.Allowing Chinese investment in European car assembly should not be a taboo

131、despite the symbolic dimension of such a decision and the likely opposition of some European carmakers.All else unchanged,it would be far more beneficial for Europe to have China-branded vehicles on its roads if they were assembled locally rather than imported.Evidence from European electric-battery

132、-assembly projects,where China is the largest investor,and the interest expressed by Chinese carmakers in European automotive factories due to be closed show deals would have high chances to materialize.As raw materials constitute about half of battery costs,increasing self-sufficiency in this area

133、could reduce Europes reliance on imported electric powertrain components and strengthen the domestic value chain.Europe should also consider prioritizing the development of mining and refining capacities when possible,and establishing trade deals with partner countries when not,to secure its economi

134、c and strategic interests.In this respect,the European Critical Raw Material Act(CRMCA)is a step in the right direction whose specifics will need to be communicated and enforced as soon as possible.Late in current battery technology manufacturing,Europe should also prepare for what lies ahead as bot

135、h China and the US are heavily investing in next-generation battery technologies.Lithium-ion chemistries,particularly NMC(nickel,manganese,cobalt oxide)dominate the current battery market due to their advantageous blend of energy density,power and safety features.However,the reliance on constrained

136、metals such as cobalt necessitates the exploration of alternative battery technologies to mitigate supply risks and develop different types of batteries for different needs.Emerging alternatives,such as solid-state batteries,present promising prospects for enhanced energy density,safety and sustaina

137、bility.09 May 202319AppendixScenario assumptions The assumptions used for the 2030 scenario are as follows:A compound annual growth rate of+2.5%for the Chinese passenger car market by 2030,bringing annual registrations to 28.6mn units,and a linear progression of the market shares of Chinese carmaker

138、s to 75%of total passenger car registrations.A compound annual growth rate of+6.3%for the European passenger car market by 2030,bringing annual registrations to 15.1mn units.Higher growth for the European market does not reflect greater potential,but the historical low in registrations reached in 20

139、22 and a progressive return to the peak registration levels of the 2010s.BEV penetration would stand at 80%,which is close to the weighted average of the pledges made by leading carmakers present in Europe for 2030(81%).Value added per vehicle of EUR14,200.Value added data were retrieved using Euros

140、tats national accounts aggregates by industry database,using value added for 2019 rather than 2020 or 2021,which are often incomplete and reflecting the highly unusual pandemic years,and the NACE code C29,which encompasses both carmakers and automotive suppliers.Vehicle production data are those pro

141、vided by OICA and collected from national trade bodies.Vehicle definition may differ between countries.Data from the OECDs Trade in Value Added database also cover the NACE C29 activity code.The latest data are for 2018.Industry data sourcesData on the automotive market used in the report come from

142、the following sources:OICA(International Organization of Motor Vehicle Manufacturers):time series on global vehicle production.ACEA(European Automobile Manufacturers Association):time series on vehicle production,registration,import,export etc.KBA(Kraftfahrt-Bundesamt):time series on car registratio

143、ns for the German market just-:time series on European automotive factory production(data retrieved from a Bloomberg terminal)China Automotive Information Net:time series on China automotive sales(data retrieved from Bloomberg terminal)China Automotive Technology and Research Center(CATARC):time ser

144、ies on China automotive retail sales(data retrieved from Bloomberg terminal)ev-database.org:database on the BEV available on the European marketAllianz Research20ALLIANZ RESEARCHteamOur09 May 202321Chief Economist Allianz SELudovic SAna Boataana.boataallianz-Andreas JArne HHead of Economic Research

145、Allianz TradeHead of Insurance,Wealth&Trend ResearchAllianz SEHead of Macroeconomic&Capital Markets ResearchAllianz SE Franoise HuangSenior Economist for Asia Pacificfrancoise.huangallianz-Manfred StamerSenior Economist for Middle East&Emerging Europemanfred.stamerallianz-Luca MonetaSenior Economist

146、 for Africa&Middle Eastluca.monetaallianz-Macroeconomic ResearchMaxime LemerleLead Advisor,Insolvency Research maxime.lemerleallianz-Ano KuhanathanHead of Corporate Researchano.kuhanathanallianz-Aurlien DuthoitSenior Sector Advisor,B2C aurelien.duthoitallianz-Corporate ResearchMichaela GrimmSenior E

147、conomist,Demography&Social PKathrin StoffelEconomist,Insurance&WPatricia Pelayo-RomeroEconomist,Insurance&ESGpatricia.pelayo-Insurance,Wealth and Trends ResearchPablo Espinosa UrielInvestment Strategist,Emerging Markets&Alternative Assetspablo.espinosa-Capital Markets ResearchRoberta FortesSenior Ec

148、onomist for Ibero-Latamroberta.fortesallianz-Markus ZimmerSenior Economist,ESGJordi Basco CarreraLead Investment Strategistjordi.basco_Maria LatorreSector Advisor,B2Bmaria.latorreallianz-Maxime Darmet CucchiariniSenior Economist for US&Francemaxime.darmetallianz-Maddalena MartiniSenior Economist for

149、 Italy&GJasmin GrschlSenior Economist for EAllianz Research22Recent PublicationsDiscover all our publications on our websites:Allianz Research and Allianz Trade Economic Research03/05/2023|No quick wins:more jobs but little productivity in the Eurozone28/04/2023|Policy rate decisions:the end of the

150、beginning or the beginning of the end?26/04/2023|Unpacking returns on equity21/04/2023|Commercial real estate concerns for US banks19/04/2023|Allianz Pension Report 202314/04/2023|European food inflation hungry for profits?11/04/2023|Insolvency Report:No rest for the leveraged06/04/2023|US:Credit cr

151、unch in the making?05/04/2023|The green industrial revolution 29/03/2023|Everything everywhere all at once24/03/2023|Swiss shotgun wedding Whats next?23/03/2023|Centrifugal emerging markets16/03/2023|Mind the gap:the USD30trn global liquidity gap is here to stay10/03/2023|Inside corporate earnings08

152、/03/2023|Easy come,easy go 03/03/2023|#IWD:Employ and pay them more!28/02/2023|The new risk frontier in finance:biodiversity loss23/02/2023|Russias war economy21/02/2023|The“five Ds”of structurally higher inflation17/02/2023|The silver lining for global trade14/02/2023|Rates,not roses09/02/2023|Mone

153、tary policy in Central and Eastern Europe ahead of the curve?07/02/2023|A Faustian bargain:Europes answers to the US IRA02/02/2023|Falling off a savings cliff?31/01/2023|Do we need more inflation to get more corporate investment?27/01/2023|Consumption:Whats(wealth)got to do with it?24/01/2023|No,the

154、 energy shock in Europe does not mean de-industrialization27/01/2023|Consumption:Whats(wealth)got to do with it?24/01/2023|No,the energy shock in Europe does not mean de-industrialization20/01/2023|Eurozone:quantitative tightening and sovereign debt servicing cost17/01/2023|Allianz Risk Barometer 20

155、2313/01/2023|Pension reform in France:Bonjour tristesse10/01/2023|Wealth without pensions in Asia15/12/2022|Economic Outlook 23-24:Keep calm and carry on 09/12/2022|The economics of war,(and its aftermath)08/12/2022|Eurozone:Old lessons for a new world01/12/2022|House of cards?Perspectives on Europe

156、an housing09 May 202323Forward looking statementsThe statements contained herein may include prospects,statements of future expectations and other forward-looking statements that are based on managements current views and assumptions and involve known and unknown risks and uncertainties.Actual resul

157、ts,performance or events may differ materially from those expressed or implied in such forward-looking statements.Such deviations may arise due to,without limitation,(i)changes of the general economic conditions and competitive situation,particularly in the Allianz Groups core business and core mark

158、ets,(ii)per-formance of financial markets(particularly market volatility,liquidity and credit events),(iii)frequency and severity of insured loss events,including from natural catastrophes,and the development of loss expenses,(iv)mortality and morbidity levels and trends,(v)per-sistency levels,(vi)p

159、articularly in the banking business,the extent of credit defaults,(vii)interest rate levels,(viii)curren-cy exchange rates including the EUR/USD exchange rate,(ix)changes in laws and regulations,including tax regulations,(x)the impact of acquisitions,including related integration issues,and reorgani

160、zation measures,and(xi)general compet-itive factors,in each case on a local,regional,national and/or global basis.Many of these factors No duty to updateThe company assumes no obligation to update any information or forward-looking statement cont-ained herein,save for any information required to be

161、disclosed by law.may be more likely to occur,or more pronounced,as a result of terrorist activities and their consequences.About Allianz ResearchAllianz Research comprises Allianz Group Economic Research and the Economic Research department of Allianz Trade.Allianz Group Economic Researchhttps:/ 28|80802 Munich|GAllianz Trade Economic Researchhttp:/www.allianz- Place des Saisons|92048 Paris-La-Dfense Cedex|Franceresearchallianz-Director of Publication Ludovic Subran,Chief EconomistAllianz SEPhone+49 89 3800 7859allianzallianzallianz-tradeallianz-trade