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Geely announces new Lotus EV firm backed by luxury firm LVMH
CGTN
Europe;UK
03:55

Chinese car giant Geely has announced plans to list part of its sports car brand Lotus in the U.S. through a merger with a firm backed by luxury goods investment group LVMH (Luis Vuitton).

Lotus has a plant in China and plans to make electric SUVs there. 

Peter Wells, Director of the Centre for Automotive Industry Research at Cardiff University, said the deal was a "do or die push for survival" for Lotus. 

It's the latest deal by Geely as it seeks to increase its share of the global auto marketplace and cement its place at the forefront of electric vehicle (EV) technology. 

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With the electrification of the car industry gathering pace, particularly in Europe, Chinese firms are grabbing an increasing share of the market.

Wells told CGTN Europe: "Geely has been a really good steward for many of these companies in a way that perhaps hasn't been the case in the past. Many of those companies, Lotus included, have had a fairly turbulent ownership history."

He added: "Geely has been a pretty steady hand on the tiller and has been quietly investing significant sums of money in Lotus and the other companies it looks after in order to position them for this forthcoming electric revolution."

In 2022, electric vehicles made by Chinese carmakers reached a 9 percent market share in Europe, almost double the previous year’s figure, according to analysis by auto consultants Inovev. 

On average, Chinese manufacturers can make an electric vehicle for $11,000 less than their western rivals. 

Consultancy JATO Dynamics says the average price of an electric vehicle in Europe is 56,000 euros ($61,000). By contrast, Chinese groups almost halved the average price of an electric vehicle in China between 2015 and the first half of 2022 to just 32,000 euros ($35,000). 

Their greater efficiency, and the higher cost of battery production in Europe, means Chinese firms can export and compete favorably. 

Geely is cementing its place at the EV revolution. /Geely via CFP
Geely is cementing its place at the EV revolution. /Geely via CFP

Geely is cementing its place at the EV revolution. /Geely via CFP

Inovev believes that Chinese groups could grab a fifth of Europe's electric vehicle market by 2030, while European brands would see their share fall from 66 percent in 2021 to 45 percent. 

In the EU, the sale of new cars running on petrol and diesel will end in 2035. But challenges remain around the production and affordability of electric cars, along with questions over whether enough infrastructure can be put in place to persuade drivers to make the switch.

Automakers were hobbled in 2022 by a lack of semiconductors, the computer chips that are key for all types of cars. But more than 1.1 million electric cars were sold in the European Union last year, up by a quarter to a record 12.1 percent share of the market.

According to Wells: "There's still some echo effect from a semiconductor shortage. But overall it's really strong. The forecast will keep getting stronger for the share that electric vehicles will take in the future."

Al Bedwell, director of Global Powertrain at LMC Automotive, said the growth "will accelerate to 50 percent in 2023 as the chip crisis eases."

Elon Musk's Tesla remains the biggest seller of electric cars globally, shifting 1.3 million units in 2022, driven by its Model Y SUV. But China’s electric vehicle leader BYD is hot on its heels, almost tripling sales last year to 900,000 cars, and with plans to develop in Europe and North America.

Chinese carmakers have numerous advantages, benefiting from a vast domestic supply chain, including the world’s largest battery maker, CATL. This gives them access to innovative technologies, like battery swapping, or lithium iron phosphate batteries.

Source(s): Reuters

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