Q&A: Dr Jan Klein

IÉSEG School of Management ‘s Associate Professor of Marketing discusses the impact of new vehicle manufacturers entering the EU market, EV adoption, tariffs and future trends in self-driving

The automotive landscape is changing. As electrification becomes a larger part of passenger vehicle sales new manufacturers are entering the market.  Work by Schmidt Automotive Research reported that 500,000 new passenger cars from China had entered the West European market during the first 10 months of 2023.

This consisted of 150,000+ models from Western VMs manufacturing in China, including BMW, Dacia, Honda and Tesla, and 250,000+ Chinese brand vehicles, including SAIC-owned MG and Geely-owned Polestar, plus smaller volumes from BYD, Chery, Nio and Xpeng.

It’s made authorities look more closely as the market and how it will be impacted by a new breed of brands, and whether tariffs are needed.

The European Commission is investigating EVs imported from China. Launched in October, provisional duties could be imposed by the EU as soon as July.

MotorPro asked business expert Dr Jan Klein, Associate Professor of Marketing at France’s IÉSEG School of Management, for his views on where the market and the EU final stand could be.

What’s the state of play in the EU electric vehicle market and why is there an increase in the number of new brands entering?

The adoption of new technologies, such as EVs, is driven by the promise of enhancing the customer's status quo. However, traditional car buyers often view EVs as costly and the transition as difficult, citing concerns about range, battery reliability, and charging infrastructure.

This perception hinders widespread adoption – EVs are simply not seen as an improvement to the customer’s current situation. Financial incentives, such as substantial price discounts, thus play a crucial role in encouraging EV purchases. Currently, this approach is benefiting the providers of more affordable EV options, with China leading in this regard.

Would tariffs on imported Chinese EVs really be beneficial? 

Discussions within the EU and member countries about imposing tariffs on Chinese EVs will hinder progress. Protectionist measures risk stifling innovation by limiting the availability of financially attractive EV options, leading customers to delay or forgo purchases, ultimately slowing EV adoption.

A tariff would even further propel the customer’s perception of EVs as expensive or even non-affordable. Moreover, given China's significance as a market for European car manufacturers, engaging in a tariff war appears unwise in general.”

How are the EU and UK deadlines for ending the sale of new combustion engine vehicles likely to steer the market?

The EU's directive to ban combustion engine car sales by 2035, along with the UK's similar zero-emission mandate, is reshaping the automotive industry. This forced adoption poses a tremendous challenge as it clashes with established consumer behaviour in the car market. Traditional car buyers are not likely to embrace this forced adoption and might even lack the financial resources to buy EVs.

Thus, the eventual outcome in 2035 remains uncertain, with the potential for a surge in sales of used cars with combustion engines. Ongoing debates, exemplified by discussions on tariffs for Chinese EVs, underscore the challenges surrounding the problems with the zero-emission mandate when it comes to customer behaviour in the car market.”

Other than EVs, what are the major trends you’re seeing?

The future of self-driving technologies raises interesting questions about their role in our transportation landscape. Will we continue to own them much like conventional cars, or will they predominantly serve as a form of public transit?  

Promoting peer-to-peer car sharing emerges as an interesting option to drive the adoption of EVs and self-driving cars. Owners can generate income by renting out their vehicles when not in use, providing a substantial financial incentive. Elon Musk has already hinted at Tesla's plans to enable such a feature.

Encouraging peer-to-peer sharing may prove a more effective strategy for boosting the presence of EVs and self-driving cars, in comparison to government regulations. The potential for growth is evident when we consider the thriving market for home rentals on platforms like Airbnb.