00:00Let's get more on this. Daniel Harrison is an automotive analyst at Ultima Media.
00:05Daniel, great to speak to you. So, can retro rescue Europe's car industry?
00:12I think a simple answer is it's a good move in the right direction.
00:17It's one of the few advantages that legacy automakers clearly have over the newer entrants.
00:23But fundamentally, as your piece rightly identifies, there's a structural cost advantage
00:29that China has around 30% cheaper production costs, mainly due to energy costs,
00:35lower labour costs and lower material costs.
00:37So, it's not just a question of Chinese manufacturers setting up in Europe
00:43because clearly they are then going to be exposed to those higher energy costs
00:46and potentially labour costs as well.
00:48So, it's an interesting equation right now as to what the strategy should be.
00:54Yeah, I can see why these cars might appeal to, say, car super fans,
00:58but it feels like for many people at the moment, cost is the main factor
01:03and design, unless you're really talking the kind of top-level cars,
01:06is not as important. Is that correct?
01:09I mean, cost is a vitally important thing,
01:13especially in the sort of lower-end entry-level vehicles.
01:15And it's very noticeable that European automakers have largely abandoned the entry-level vehicles
01:20because they were uneconomical and unviable to produce in Europe
01:26due to higher safety regulations, higher emission regulations.
01:29So, it's very interesting that they...
01:31And China saw that gap in the market and have taken it.
01:34And it's very interesting that European car-man-herchers
01:36are now having to return to that market space
01:39because that's where the volumes are.
01:41That's where the real monies and profits are.
01:43Some analysts are saying that these retro-style EVs are important
01:48because they can't be replicated.
01:50But many Chinese brands now have brought on designers
01:54that have worked at European car companies
01:56and they're also starting to produce in European factories.
02:00So, should Europe be embracing Chinese investment and competition
02:04rather than just seeing it as a rival?
02:07Quite. I mean, this is the sort of $64,000 question
02:10which the European Union is thrashing around
02:13because, you know, they're under considerable pressure
02:17for lobbying from automakers to resist this influx of cheaper Chinese EVs
02:22and, you know, state aid funding from the Chinese government, of course,
02:27is arguably making that playing field unfair.
02:31And currently, the European Commission is, you know, imposing EV tariffs,
02:35they're imposing battery passports, rules of origin, etc.,
02:39on components to make it very difficult to sell into the European Union
02:43unless you are producing manufacturing in the European Union.
02:48And I think what's most likely to happen, you know,
02:51because we've got a few companies such as BYD setting up factories in Hungary,
02:55but what's more likely is more partnerships
02:57between European manufacturers and Chinese manufacturers.
03:02For example, Cherry are going to use one of the production lines
03:06in Sunderland's Nissan plant,
03:10and Cherry also in Leap Motor in Spain.
03:13So, you see these sort of partnerships spring up.
03:16So, it's more a technology transfer and an alliance
03:18rather than just setting up new plants.
03:22Daniel Harrison, great to speak to you.
03:24Ultimate Analyst at Ultimate Media.
03:26Thanks for those insights.
