Is The Funky Cat Leading A Chinese Auto Invasion Or An Incursion?

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New Chinese electric cars like the ORA Funky Cat are gearing up this year to win sales in Europe but fears they may score an existential victory against local automakers look more like an incursion, for the time being at least.

Chinese pioneers Zhejiang Geely Holding Group’s Polestar, SAIC’s MG and BYD, are have already established bridgeheads in Europe.

Analysts say NIO, Great Wall Motors (GWM), which makes the ORA Funky Cat, Aiways, and FAW’s Hongqi brand will join the fray in 2023.

“More than ever, China-made EVs are competitive on quality and deliver value-for-money. This may be the opportune moment for Chinese EV brands to knock on the doors of Europe,” Bernstein Research said in a report published Thursday.

Europeans are used to periodic automotive industry attacks from the east. There was Japan in the 1970s and South Korea in the 1980s. Both had to overcome buyer suspicions that their products weren’t up to European standards. Low prices, value for money and impressive warranties persuaded buyers initially; higher quality than the locals eventually cemented their market share.

Chinese companies have an even more difficult task. Just like Japan and South Korea they must establish their brands as serious contenders after initial missteps with shoddy products. The Chinese must also negate some political baggage. There’s public concern about the fate of the Uyghur Muslims, often headlined in the western media. Japan didn’t have to fight off concerns it might be planning to invade Taiwan, while nobody thought South Korea was considering supplying arms to Russia while it invaded a sovereign nation in Europe.

The sheer scale of the ramifications for China’s economy if a major political crisis was ever triggered makes it seem extremely unlikely, to this observer at least.

Meanwhile, experts predict modest to solid growth in China’s European sedan and SUV sales.

According to French automotive consultancy Inovev, Chinese brands accounted for 2% of the whole European market in 2022, including internal combustion engines (ICE), increasing to 3% this year, and rising gently to 8% by 2030 of all-electric cars.

Would big Chinese success lead to EU tariff barriers?

Inovev vice-president Jamel Taganza said that’s unlikely because many German automakers depend on the China market.

“Consequently, I do not expect Europe to protect its market as the U.S. is doing with massive subsidies for local production. But if the volume of sales is high enough, a carmaker will often start to produce locally,” Taganza said.

Matt Schmidt of Schmidt Automotive Research expects a much higher intrusion by the end of the decade. In Western Europe this year, battery electric vehicles (BEVS) from Chinese brands will account for one in ten of new electric cars sold. This could reach 12.5% in 2030.

Western Europe includes the 5 big markets of Germany, Britain, France, Italy and Spain.

Schmidt Automotive expects overall BEV sales in Western Europe of around 1.6 million and a market share of 15.1 % in 2023. Sales will surge to 2.7 million in 2025 (20.0% share) and on to 9.2 million (65.0%) in 2030.

Schmidt Automotive expects Polestar, MG and BYD to lead the Chinese drive in 2023 in Western Europe, accounting for over 80% of sales.

Felipe Munoz, global automotive analyst at JATO Dynamics, said the Funky Cat isn’t likely to be a runaway success, but is an impressive start.

“Cars like the ORA funky Cat may not succeed in Europe right now, but they are an early warning of what China can do in the (cheapest, and smaller car) segments in Europe once the local offer disappears or becomes more expensive,” Munoz said.

I’ve just been driving the GWM ORA Funky Cat and it ticks some important boxes needed for European approval. It’s cute and attractive with a high-quality interior (see my review). The build quality appears impeccable. It drives very well, with the now expected lively electric car performance. Its battery range capacity claim of 193 miles was honest and I averaged 187 miles from 4 home charging efforts. On-the-road range was a problem though. It understated early mileage loss and overstated the rest. It shed range much faster over rural and urban routes usually favorable to electric cars. (see table below) The price of £32,000 after tax ($38,000) was not noticeably cheaper than the equivalent competition.

Munoz expects a minor impact from the Chinese at the start, but longer term they pose a big threat.

“The Chinese are still missing two important things about selling cars: “awareness” and “reputation”. “Awareness” you can boost, but “reputation” is a different story. I don’t think we will see a massive (early) invasion of Chinese brands in the West. They will need time to build a good reputation. Ask the Koreans,” Munoz said.

“On the other hand, their cars are improving so fast that they meet or exceed the quality of European/Japanese/Korean-made cars. This is both impressive and threatening. It is impressive because they are doing this at a very high speed compared to the Japanese and Koreans. And it is threatening because they have more power to offer these quality cars at more competitive prices,” Munoz said.

“As there are so many brands and models, the Chinese are likely to target all segments, but they won’t have the same impact in each one of them. I mean, it will be harder to convince an owner of a Mercedes/BMW/Audi to stop buying these cars and move to a Hongqi or NIO. Tesla has done a good job, but it is only because it started to offer the best of the EV technology at the right time,” according to Munoz.

Bernstein Research expects the Chinese to concentrate on the lower end of the market, but will be eying the top end too.

(Potential buyers will find the idea a little other-worldly that value-for-money costs $40,000, even if it is after tax.)

“We expect Chinese EV players to find better success targeting the compact, mass market EV segment that has so far been under-penetrated in Europe. BYD’s Atto 3 priced at €38,000 ($40,000) and MG4 priced at €36,000 are value-for-money choices. On the other hand, Chinese (manufacturers) like NIO may have to showcase more compelling differentiation in the premium segment. A potential entry strategy may involve targeting the mass market segment to leverage the cost advantage, but also selectively launching one or two premium vehicles to build up the brand image,” the Bernstein report said.

JATO Dynamics’ Munoz said Chinese success is more likely in the entry-level segments, (€15,000-$16,000) not least because European politicians have forced local manufacturers to abandon the affordable cars.This sector used to be dominated by little ICE-powered Citroens, Fords, Peugeots, VWs, Skodas and SEATs. The EU has decreed that only new electric vehicles will be sold after 2035 (if a current stumble is sorted out) using regulations that make small ICE cars unaffordable. The EU seems happy to concede the small car market to China, Munoz said.

GWM ORA Funky Cat First Edition review

Electric motor – permanent magnet synchronous

Torque – 250 Nm

Power – 169 hp

Battery – 48 kWh Lithium ion phosphate

Gearbox – single-gear

Claimed battery range/battery capacity – 193 miles (WLTP)

WintonsWorld test range/battery capacity estimate – 187 miles (average of 4)

WintonsWorld highway cruising range estimate – 133 miles**

WintonsWorld highway cruising penalty* – 31%

Charging – 20 miles per hour with 7 kWh ChargePoint

Drive – front-wheels

Top speed – 99 mph

Acceleration – 0-60 mph 8.1 seconds

Warranty – 5 years unlimited

Battery, Powertrain – 8 years/100,000 miles

Price – £31,995 after tax

(*estimated at indicated 75 mph)

(**suspected overestimate as later rural cruising had 49% penalty)

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