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New entrants are shaking up Europe’s auto industry. Can the sector stay competitive?

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Revving up Europe’s auto sector

In the news

•

Playing catch-up. Western automakers are increasingly relying on China to produce critical battery parts needed for the global shift to electric vehicles (EVs). Chinese battery manufacturers provide roughly 80% of the world’s battery cells. The country also processes much of the world’s supply of key raw materials used in battery making, such as cobalt, graphite, nickel, and lithium. Under years of state sponsorship, China’s EV market has grown to become the world’s largest. That leaves other nations with a tough task: catching up. [Bloomberg]

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‘Running into reality.’ Chinese carmakers commanded the showrooms of a biennial auto expo held in Munich in September, with twice the number of Chinese companies displaying their models when compared with 2021. The auto industry is transforming rapidly. In Europe, EVs make up nearly 20% of all cars sold. By 2030, EVs could account for 35% of global auto sales, according to the International Energy Agency. China’s automakers are expanding into overseas markets as local demand for Chinese-made vehicles slows. [FT]

Chinese OEMs are gaining ground, reaching 45% market share in their home market in 2022 and octupling their market share in Europe between 2020 and 2022.

On McKinsey.com

•

A regional powerhouse. Europe’s automotive industry is a powerhouse for the region. The sector contributed roughly 10% of Europe’s exports in 2022. However, the auto industry’s status as a jewel of the European economy is being challenged as leaders face massive shifts such as the electrification of vehicles, which requires differentiation through software. This has allowed new entrants in Europe and abroad, especially in China, to win market share, according to McKinsey senior partner Ruth Heuss and coauthors.

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Decreasing share of market. McKinsey analysis suggests that newer automakers are testing European OEMs’ leadership position. Since 2019, European incumbents have lost six percentage points of market share in their home market and five percentage points in China, according to the McKinsey Center for Future Mobility. In addition, new EV start-ups control 51% of the global battery-electric-vehicle market. See our road map for seven pillars that Europe’s automotive leaders can act on to help the industry stay competitive.

Study our road map

— Edited by Belinda Yu, editor, Atlanta

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 01:05 - 31 Oct 2023

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New entrants are shaking up Europe’s auto industry. Can the sector stay competitive?

Revving up Europe’s auto sector

In the news

Chinese OEMs are gaining ground, reaching 45% market share in their home market in 2022 and octupling their market share in Europe between 2020 and 2022.

On McKinsey.com