Volkswagen, the identity of the German auto industry, is going through a bad phase these days. For the first time in its history, the company plans to shut down three of its plants in Germany. The primary reason? The growing dominance of Chinese electric vehicles (EVs), which are changing the automobile industry globally.
In just three years, China has swiftly emerged as the world’s largest exporter of passenger motor vehicles, overtaking Japan in 2023. According to China’s customs data, almost 25% of the vehicles exported last year were electric (EVs).
BYD’s Rising Dominance
China is Volkswagen’s biggest market, but witnessed a dramatic decline in the company’s sales, dropping by 64% this year. Chinese companies like BYD are gaining market share, affecting not just Volkswagen but other international car manufacturers as well.
Affordability and Market Share
Chinese EVs are significantly cheaper than their European counterparts, allowing them to capture an impressive 11% of Europe’s EV market. This shift is a result of falling battery costs, which have made EVs more accessible and reasonably priced.
Potential threats to domestic EVs
This has sparked concerns within the EU about potential threats to domestic EV manufacturers, leading to the decision to impose tariffs of 17%-35% on Chinese Electronic Vehicles. Earlier this year, the United States and Brazil also imposed their own import tariffs on Chinese EVs. Canada is also considering the need to do the same.
On the other hand, countries like Thailand and Philippines continue to welcome Chinese EVs, viewing them as an opportunity to reduce reliance on fossil fuels in their transportation systems and decrease greenhouse emissions.
The use of CIMS
Chinese EVs are equipped with advanced technologies, including Cellular Internet of Things Modules (CIMS). These modules enable devices to connect to the internet, transmit data securely, and fit seamlessly into compact systems. However, this raises the concern that China can spy abroad through its autos.
Data Privacy Concerns
Chinese EVs are equipped with sensors, cameras and internet connections. Personal data can also be collected from them, which China can use for its own benefit. Similar apprehensions are being expressed about Chinese telecom companies as well.
US Takes Action
Earlier this year, the US banned the sale of internet-connected Chinese vehicles. It was claimed that Chinese Electronic vehicles are fitted with such software that keeps tracking the drivers all the time, raising serious privacy and surveillance issues.
A Global Shift
China’s rapid advancements in EV technology are redefining the automotive industry. The global auto industry is at a turning point as nations struggle with the threat of low-cost, high-tech Chinese automobiles, balancing innovation with security and competitiveness.
