It has always been the dream of Chinese car companies to enter the European and American markets and open the "second growth curve".

However, for a long time, due to product power, compliance and other reasons, it is difficult for Chinese cars to make major breakthroughs in mature markets such as Europe and the United States. In desperation, they can only "go through" Southeast Asia, the Middle East, Russia, South America and Africa, hoping to achieve "rural encirclement of cities."

Now, Chinese car companies are trying again. Compared with the previous wave of going out to sea, this time the "newly built car" is in the vanguard and goes straight to the European market.

• In September 2019, SAIC Mingjue ZS pure electric SUV was listed in Norway and the Netherlands.

• XPeng Inc. has already exported more than 300 G3i to Norway, and then the P7 will also land in Europe.

• In May 2020, 700 customized European U5s of Aichi cars were shipped to the European market and put into local travel rental services.

• In June 2020, SAIC Chase announced that the first 328 SAIC Chase MAXUS EV30 vehicles would be shipped to Norway.

• BYD teamed up with Norwegian distributor RSA to introduce Tang EV to the Norwegian market

• Recently, NIO Inc. also officially released the Norwegian strategy, which will start the delivery of the new ES8 in Norway in September this year, and another car, the ET7, will also enter the Norwegian market next year.

The export volume of new energy vehicles is increasing greatly.

According to the export statistics submitted by enterprises, the China Association of Automobile Manufacturers (hereinafter referred to as "CAA") exported nearly 70,000 new energy vehicles in 2020, an increase of 89 percent over the same period last year, accounting for 7 percent of the total automobile exports, an increase of 3.4 percentage points over the previous year. Among them, 44000 pure electric models were exported and 26000 plug-in hybrid models were exported. By contrast, the export volume of Chinese car companies reached 995000 in 2020, down 2.9 per cent from a year earlier.

In exchange for a new car, will this time go to sea in a flat or frustrated way? I'm afraid the situation is not simple.

"springboard" Norway

In this wave of "going out to sea", NIO Inc., XPeng Inc., BYD, Mingjue and other car companies all take Norway as the preferred place.

Norway, a country with a population of 5.3 million and a major oil producer in the world, benefited greatly from the third oil crisis in 1980. But Norway, which is now the country with the highest proportion of electric car sales, is keen to tear off the "oil" label.

According to the Norwegian Highway Federation, a total of 141400 new cars were sold in 2020, of which 76800 were pure electric vehicles, accounting for 54.3%, making it the first country in the world to account for more than half of annual electric vehicle sales.

Christina Bu, secretary-general of the Norwegian Electric vehicle Alliance, said they expected electric vehicles to account for 65 per cent of the Norwegian market in 2021. This is one step closer to their goal of a total ban on the sale of fuel cars by 2025.

At the same time, Norway's penetration rate of new energy vehicles is as high as 65.1%, making it the country with the highest penetration rate of new energy vehicles in the world. By contrast, Germany, France and the UK have penetration rates of between 10 and 15 per cent.

What makes Norway so "special" is its strong preference for new energy vehicles.

It is understood that in order to promote the sales of electric vehicles, Norway has provided a large number of incentives, such as exemption from high import tax, registration tax and sales tax, to stimulate the sales of electric vehicles. In addition, electric car owners do not have to pay tolls and can also use bus lanes.

This makes the Norwegian rechargeable pile foundation more mature and the vehicle cost lower. By the end of 2020, the cumulative number of charging piles registered in Norway was 450000, second only to Germany's 600000 in Europe, with 35 charging piles per 10, 000 people, higher than the 6.9 charging piles per 10, 000 people in France and 2.3 charging piles per 10, 000 people in Japan.

These features provide excellent opportunities and conditions for newly built cars in China, which focus on electric cars.

Of course, in the eyes of Chinese car companies, Norway is only a "springboard", and the fast-growing European market is their ultimate goal. Li Bin revealed that NIO Inc. is expected to enter five European countries next year.

Europe is definitely a big market. Data show that in 2020, the European market sold 1.365 million new energy passenger vehicles, an increase of 137% over the same period last year, surpassing China (1.246 million) to become the world's largest new energy passenger car market. In terms of market share, new energy and new cars account for 11% of the entire European car market, with pure electric models accounting for 6.2% and plug-in hybrid models accounting for 4.8%.

In terms of regional markets, Germany, the United Kingdom and France are the three largest consumers of new energy vehicles in Europe, with a total sales of 756000 units, an increase of 211 percent over the same period last year, accounting for 56 percent of new energy sales in Europe, an increase of 13 percentage points over the same period last year. This will be the main area for the development of China's sea-going vehicles.

Similar to Norway, the current sharp growth in the European new energy market is driven by strong new energy subsidy policies.

It is understood that Germany will extend the subsidy of 1.2 billion euros, which began in 2016, to 2025. Starting from July 2020, the government subsidy for pure electric vehicles up to 40, 000 euros will be increased by another 50%. The UK will receive a subsidy of 3500 pounds for electric passenger cars and up to 8000 pounds for electric vans with less carbon emissions than 75g/km. France, Norway, Spain, Portugal and other countries have introduced direct subsidy policies, charging pile construction policies and so on.

However, in addition to "carrots", Europe has also offered a strict "big stick" policy. The European market is not as easy to eat as thought.

In 2014, the EU required 95 per cent of EU-wide passenger vehicles to reduce their average carbon emissions to 95g/km (equivalent to 4 litres per 100km of fuel consumption) in 2020, and the excess will be fined 95 euros per g/km of carbon dioxide emissions per vehicle to meet this requirement by 2021.

On this basis, in September 2020, the EU Green Agreement updated the draft Climate Target Plan 2030, proposing that carbon dioxide emissions per kilometre of passenger vehicles should be reduced to 50 per cent of that of 2021, or 47.5g/km (about 2 litres per 100 km), 20 per cent lower than the original 59.4g/km target. This makes the major European car companies have to accelerate the electrification and digital layout.

Multiple challenges

Over the past 20 years, Chery, SAIC, Geely and BYD have been actively expanding overseas markets, but have failed to gain a firm foothold in the European market. The reasons behind are multi-level, in which product power is a very important factor.

As we all know, Chinese car companies mainly take the middle-and low-end route overseas, relying on performance-to-price ratio as their main competitiveness. In Europe, Chinese cars are labeled as "cheap goods", which are not only cheap, but also of unreassuring quality. In 2007, in the NCAP crash test in Europe, Zhonghua Zunchi, which had just entered the German market, only got a 1-star rating (5-star highest).

However, with more than a decade of active exploration, Chinese car companies have made great progress in technology, manufacturing and process management. According to the 2020 China New Energy vehicle experience study released by automotive consultancy J.D. Power, SAIC-Volkswagen (105PP100) ranked first in the quality of new cars in the plug-in hybrid market, while BMW (108PP100) ranked second in the plug-in hybrid market. NIO Inc. (109PP100) ranked first in the quality of new cars in the pure electric vehicle market, while Tesla, Inc. (113PP100) and Euler (129PP100) ranked second and third in the pure electric vehicle market.

In this evaluation system, the new car quality score is expressed by the average number of problems per 100 vehicles (PP100). The lower the score, the less the number of problems, the better the quality.

This is also the strength of the newly built cars to go to sea collectively.

But there is still a lot of work to be done to gain a foothold in Europe. In the view of relevant institutions in Europe and the United States, Chinese car companies have invested a lot of energy in design, technical performance and intelligence, but relatively weak in brand building. In particular, Chinese car companies in the foreign market is still in the early stage, consumers feel strange to these new brands, psychological acceptance and trust is not high.

Chen Anning, group vice president of Ford Motor Company, said in an interview that many foreign consumers simply can't tell which Chinese brand is which, they just know in general that they are all from China. Therefore, if enterprises want to stand out from Chinese brands, it is a crucial step to shape brand personality and differentiation.

However, brand building is a long-term systematic project. At present, most overseas car companies choose to cooperate with local dealers. For example, XPeng Inc. has in-depth cooperation with Norwegian dealer Zero Emission Mobility AS (ZEM) to provide market sales and after-sales service to local consumers; BYD has partnered with RSA, a Norwegian car dealership group; and Red Flag E-HS9 is imported and distributed by Motor Gruppen in Norway.

Although this model can avoid some risks and promote sales quickly, the control of automobile manufacturers will be affected in terms of brand image, awareness, sales standards, after-sales service and spare parts.

By contrast, NIO Inc. 's direct marketing model, or a new attempt to build a brand image overseas. It is understood that NIO Inc. plans to copy more of the "Chinese model" to Norway. Li Bin said that NIO Inc. 's business model in every market is the same, that is, it adopts the model of infrastructure first, direct marketing and serving users. "We not only sell cars, we also want to build a community that starts with cars. "

In addition, local operation is also the key to sustainable development. In addition to the need to consider tax rates, policies, regulations, standards and many other details are also factors that sea-going enterprises must consider.

Prior to this, Chinese overseas car companies have stepped on many "pits", such as services that do not reflect value, only providing spare parts and solving quality problems for overseas markets, not to mention services; pricing at cost can only maintain short-term profits, unable to precipitate to reinvest in new products, customer service and corresponding network expansion; lack of in-depth understanding of the local market, all product definitions are handed over to dealers, resulting in deficiencies.

In this regard, auto consulting company J.D. Power has prescribed a prescription for Chinese car companies entering overseas: first of all, be aware that there may be differences between overseas consumers and Chinese consumers in expectations, preferences, habits, behaviors, etc.; second, "first impression" is very important; third, try subversive innovation in the local market, and then copy the successful experience to the international market to form a differentiation advantage.

Europe is not only the birthplace of the development of many car companies, but also a very mature automobile market, which is mainly occupied by German and French cars. Entering the European market is destined to be a road of flowers and thorns, but it is also a road that Chinese car companies must take. Stepping over it means that you have mature systematic ability and have the opportunity to grow into a world-class company.

However, there is only a thin line between the pioneers and the martyrs.