The flow of Chinese-made cars is growing rapidly

The BMW iX3, an electric car, will be shown at the Beijing Motor Show in 2020 for the first time.

Large-scale imports of Chinese-made vehicles and batteries are expected to have a major impact on the domestic automobile market and spare parts industry in Korea. The increase in Chinese imports can be attributed to competitive pricing, driven in part by rising raw material costs.

Experts believe that although it may be difficult for government regulations to limit the import of Chinese cars and batteries, local car manufacturers and spare parts suppliers must enhance their competitiveness.

According to industry sources on September 12, brands currently importing cars from China include Volvo, BMW, and Tesla.

Volvo had previously imported its mid-size S90 sedan from China. However, due to the growing demand for its XC60 mid-size SUV, it has decided to import its Chinese production until March next year. “We are giving customers the option to choose between Chinese and Swedish models due to potential concerns about Chinese-made vehicles,” Volvo Korea said. Volvo’s all-electric brand, Polestar, is importing the Polestar 2 from China.

BMW’s currently sold iX3 mid-size SUV is all Chinese-made, and Mini is also planning to bring an all-electric Mini Cooper SE coming from China next year.

Tesla’s Model Y, which has resumed sales in Korea, is imported from China, and the Model 3 will also be replaced with Chinese production in the future. The reason for the increase in Chinese-made cars is a savings in manufacturing costs of about 20% compared to those produced in countries such as Sweden (Volvo and Polestar 2), Germany (BMW), and the United States (Tesla).

For example, Tesla’s Model Y originally priced its all-wheel-drive Long Range model at 78.74 million won and its all-wheel-drive Performance model even higher at 85.34 million won. However, the Chinese version, despite being a rear-wheel drive model, is about 20 million won cheaper. The Chinese-made Volvo XC60 is about 500,000 won cheaper than its Swedish counterpart.

If these multinational luxury cars continue to enter Korea at relatively lower prices, it may affect domestic car sales.

Electric vehicle batteries from China are also becoming the norm. Currently, domestically produced electric vehicles such as Hyundai’s Kona Electric, Kia’s Niro EV, the upcoming Ray EV, and KG Mobility’s Torres EVX, and imported electric vehicles such as Tesla’s Model Y RWD, Mercedes-Benz’s EQE and EQS, part of the BMW iX3, use Mini’s Mini Electric Chinese made batteries.

While luxury EVs like BMW and Benz use nickel-cobalt-manganese (NCM) lithium-ion batteries, more affordable EVs tend to use lower-quality lithium iron phosphate (LFP) batteries.

The soon-to-be-released Ray EV, Model Y RWD and Torres EVX will all feature LFP batteries from Chinese manufacturers CATL and BYD. Hyundai’s upcoming Casper Electric (tentative name) will also be equipped with an LFP battery from CATL.

Although LFP batteries have a lower energy density, their structure is stable, reducing the risk of fires, and they are made of abundant materials, making them cost-effective. Recently, progress has been made in developing LFP batteries with higher energy densities. Higher power density usually translates to longer driving ranges for electric vehicles. However, with the expansion of Chinese batteries, the situation of the domestic battery components industry is expected to become precarious.

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