Fleets need to check new entrant Chinese manufacturers for credibility before committing to buying their vehicles, FleetCheck is warning.
Peter Golding, managing director at the fleet management software company, said that electric vehicle (EV) manufacturers from China were undergoing a period of rapid consolidation, and that some were likely to export simply as a survival strategy.
“The Financial Times recently reported that the number of Chinese EV makers is likely to fall from around 50 to 12 in the next decade. That’s a big change in a growing market and it means fleets can’t really afford to treat all of the new entrants as equal.
“Exporting to markets like the US and Europe is one obvious way for these manufacturers to attempt to survive in the kind of disruptive situation that China is seeing, and it seems credible to suggest that not all of the car and van makers who come here will end up staying.
“The potential danger for fleets is that they will end up owning or operating EVs from a manufacturer that comes to the UK and then leaves, with all of the obvious difficulties that could entail.”
Peter said that it was simply a case of fleets doing their homework on potential suppliers before committing to add vehicles to their fleet.
“It is clear that most of the new entrants that we have seen so far are credible. BYD, for example, is the fourth biggest EV manufacturer in the world while MG is a long-established market presence in the UK in its Chinese iteration.
“Also, it is important to underline that the quality of most of the Chinese product that is arriving here appears to be competitive, at least, and well-priced. The comments I’m making are not intended to put people off these cars and vans but simply to tread carefully in light of what is likely to be a fluid situation over the next few years.”
Peter added that it was difficult to predict the eventual role of the new entrants in the fleet sector but that some parallels could be drawn from the arrival of Japanese manufacturers in the 1970s and, more recently, Korean car makers starting in the 1980s and 1990s.
“What we are most likely to see is an initial situation where products are designed to be competitive and well-priced above all else and then, over several years, the Chinese manufacturers with the biggest market presence will start to compete directly with the established market leaders and move their prices in line. However, this is a process that could take some time.
“The big unknown here is the effect of trade barriers, should the EU and other countries choose to adopt them. Certainly, there is a strong argument that the Chinese market has been unfairly subsidised in competition terms, and it is possible that stringent tariffs will be added that affect the speed of market penetration.”