Former Secretary-General of China Chemical and Physical Power Association: Chinese battery companies face four major challenges in building factories in Europe

"Europe is one of the world's largest automotive markets, with around 11 million passenger cars registered every year, of which around 20% are fully electric. On November 28, Lucas Huber, Chief Operating Officer of the Swiss Federal Agency for the Economic Promotion of Greater Zurich, made the above point during the 8th International Summit on Power Battery Applications.

Huber mentioned that by 2035, only zero-emission cars will be able to enter the EU, so the growth potential of electric vehicles in Europe over the next decade is huge.

"Europe has set strict emission standards for automobiles, so that car companies have to speed up the pace, which is a very good opportunity for Chinese power battery companies. Liu Yanlong, former secretary general of the China Chemical and Physical Power Association, made a positive forecast for the future of electrification in Europe.

The resulting demand for power batteries is growing explosively, and imported batteries from China play an important role in it. Up to now, seven of the top ten power battery companies in China have announced their plans to build factories in Europe.

Among them, Hungary is one of the main destinations for investment by Chinese battery companies, which has attracted CATL (300750.SZ), EVE (300014.SZ) and Sunwoda (300207.SZ) to set up factories, and the total investment of the three Chinese battery companies in the local area will exceed 60 billion yuan.

When asked about the potential impact of the EU battery law on the industry, the Consul General of the Hungarian Consulate General in Shanghai, Bo Lan, said during the summit that protectionism is a global trend today, not only in Europe, and it will still be very difficult for Chinese power battery companies to go overseas in the short term.

The EU Battery Law, which came into effect in August this year, aims to make stricter requirements on sustainability indicators such as carbon emissions of battery products. "I can't guarantee that there will be no more protectionist policies like this in the future, but I can guarantee that there are limits to such policies. In the long run, as long as the company has confidence and technology, it will be welcomed by customers. Bolan said.

In Liu Yanlong's view, in addition to geopolitical factors, there are four major difficulties for Chinese battery companies to overcome when building factories in Europe, namely high construction costs and long cycles, lack of human resources, recognition by local communities and residents, and stricter standards than in China.

"Enterprises should work hard to reduce costs, ensure the profitability of customers while achieving self-profitability, and include more local talent. It is necessary to prepare for the new European battery regulations as early as possible, and focus on some areas with rich renewable resources when selecting sites. Liu Yanlong said.

Bolan highlighted the huge cultural differences between Europe and China, and that Chinese battery companies have completely different feelings about doing business in the two regions, and the cultural differences make it difficult for Europeans to work efficiently to meet the expectations of Chinese companies.

"Europeans like to do things their own way, and it's hard for them to understand why they have to work on weekends. He pointed out that very few Chinese companies that have set up factories in Europe have actually started production, either just bought land to start construction, or are still under construction, and the local people lack experience in the operation of Chinese factories.

Since they don't know what China is like and why they have to work on weekends, they should bring them to China and let them experience it for themselves, and they will become ambassadors in the future, so that more local employees can accept the way Chinese companies operate.