The Chinese EVs speeding to Israel

Great Wall Motors crossover  credit: PR

Israel is a small but important market for China's electric car makers, and several brands are on their way here to tussle with Tesla.

By the second quarter of 2022, at least ten Chinese automobile brands are expected to be on regular sale in Israel. This is more than in any other country with Western standards.

There are two reasons for the storming of the Israeli market by the Chinese, neither of them to do with the sales potential here, which at best amounts to that of a medium-size provincial Chinese city. The first reason is the steep rise in the share price of Tesla in the past year, which is pushing many Chinese brands towards stock exchange flotations. On the stock market, which currently prices in the billions of dollars the distant future of young electric card brands, any announcement by a Chinese brand of exports to a developed Western country like Israel is a valuable asset that can help in obtaining a dream valuation in a flotation, or at least help in raising venture capital.

The second reason is that Israel is an important part of what the Chinese government calls its "circle of friends", that is, the countries participating in the "Silk Road" project for constructing land and sea trade routes connecting China to Europe, Africa and the Middle East. In the final quarter of this year, the new Bay Port in Haifa, constructed and operated by Chinese companies, is due to open officially, and the Chinese government attributes strategic significance to it. In addition, 2022 is the target year for the signing of a free trade agreement between China and Israel, subject to political developments, and Chinese automobile manufacturers, some of which are state owned, are therefore wining strong government support as they make their way to Israel.

This trend is being warmly welcomed by both veteran and newcomer vehicle importers in Israel, several of which are energetically courting every Chinese brand that sounds as though it could be exported. All the Israeli importers, present and future, are well aware that a Chinese import franchise involves substantial short-term investment that may not yield commensurate sales or revenue in the long term. That, however, does not seem to deter anyone.

Apart from the usual risks of importing vehicles, importing Chinese vehicles involves special risks. Almost all the Chinese brands that are active and will be active in Israel focus on exporting electric vehicles, and, at least for the next three years, that can be expected to be a small, crowded niche market.

In addition, a large proportion of the Chinese brands come to Israel under the relaxed European standard for small volume production, which from the start limits imports to a few hundred units annually.

Furthermore, the Chinese car market itself has not yet stabilized and there are young brands with meager sales and heavy losses that are totally dependent on the mercies of the capital market, and especially on market sentiment towards Tesla. Should the positive sentiment disappear, these brands will vanish as fast as they appeared, burying all the importers' investment. Only last month, we saw sharp falls in the share prices of Chinese car ventures that had already been floated on Wall Street. And of course, matters such as model continuity, sales support, and obtaining standards approval within a reasonable time are still problematic points for some of the brands, and there are importers that are already feeling the effect.

In the first quarter of 2021, Tesla entered Israel with aggressive pricing that sets a low glass ceiling over the maximum pricing of a Chinese electric vehicle in Israel at around NIS 200,000 for a basic model. Tesla does not at present have a luxury electric SUV in Israel, which leaves open a window of opportunity for Chinese brands that specialize in such vehicles, but this window will be shut by Tesla itself in the near future, with its Model Y, and by a welter of European, Korean and Japanese competitors.

In short, anyone who thought six months ago of importing into Israel a premium Chinse model with a big battery and a price tag upwards of NIS 200,000 is liable to bang his head on the glass ceiling.

Analysis of imports of Chinese vehicle brands into Israel planned for the foreseeable future shows a clear picture: large, well-established Chinese brands prefer to link up with large and well established importers in Israel, while young brands, or independent brands of large manufacturers, are open to small or new Israeli importers. Here is a condensed overview of Chinese electric car brands already here or on the way.

FAW

Importer: Samelet

Among the most interesting additions to the array of Chinese cars in Israel will be those of huge state-owned company FAW. Samelet is due to start bringing in its electric cars next year. FAW is one of the five largest vehicle manufacturers in China. It sold 3.71 vehicles last year, and it is perhaps the most "patriotic" manufacturer, supplying official cars with names like "Red Flag", and it has contracts with the Chinese military.

FAW is taking its first steps in exporting to Europe in Norway, where it chose to launch a huge, 2.6 tonne SUV with a range of up to 650 kilometers under its premium HONGQI brand, at a price close to €70,000. Sales in Israel will probably be mainly of a smaller electric crossover, the size of a Hyundai Tucson, with a range of up to 400 kilometers, that will arrive later and will be cheaper.

Price: Not known.

SAIC MG

Importer: Lubinski Group

The brand of Chinese state-owned giant SAIC paved the way for all the other Chinese brands. After many years of sporadic imports, in the past three years it has managed to break the stigma of "Made in China" and to prove to suspicious Israeli customers that Chinese-made vehicles can provide solid value.

MG is now also the bridgehead for the arrival of electric Chinese cars, at least the cheaper ones, and is selling its single electric model in Israel in the hundreds per month, as well as rapidly penetrating the plug-in segment. The acid test will come when, in the coming months, the company's premium models start to arrive, headed by a modern electric SUV that will come close to the Tesla glass ceiling. SAIC is one of the few Chinese manufacturers that complies with the full European standard.

Price: Not known.

GAC

Importer: Union Motors

The first representative of the state-owned company from Guangzhou landed in Israel with problematic timing, just before the outbreak of the coronavirus pandemic. Despite aggressive pricing, around NIS 140,000, sales of its only model in Israel were slow. This year, premium, long-range electric vehicles of the AION sub-brand are expected, but in China they are priced almost as high as equivalent Tesla models.

Price: Not known.

Sky-well New Energy Automobile Group Co.

Importer: Kadouri Group

The advent of the brand's first electric crossover this year, accompanied by declarations of imminent sales, was a surprise, since this young Chinese brand (2018) only started selling in China in October 2020, and is still building a distribution network in China itself. On the other hand, this is the well-funded car manufacturing arm of a wealthy Chinese conglomerate traded in Hong Kong and active in heavy vehicles and home electronic products. The importer, Kadouri Group, has not marketed a vehicle independently before. In the past, it teamed with BMW importer Kamor Motors to sell another Chinese brand, Chery, and it may well try that strategy again.

Price: Not known.

Aiways

Importer: Balilius Group

Aiways is a young vehicle startup distinguished by an electric vehicle that complies with the full European standard (WVTA) and exports to Europe. At the moment the brand has a single model, an electric crossover aggressively priced at under NIS 180,000, and it hopes for a flotation in China or elsewhere. The start of sales in Israel is therefore a prestigious and important public relations achievement.

Price: About NIS 160,000.

Seres

Importer: Telcar

Seres is owned by Dongfeng Sokon, known internationally as DFSK, another Chinese manufacturing giant. The company has already exported initial consignments of an electric SUV to Europe and Israel, but sales are being delayed at present because of technical difficulties. The big breakthrough is supposed to come with an innovative, smart, prestige crossover with a serious range, due to receive European standard approval this year. This will not, however, be a cheap car. Its price in China starts at $40,000, and can go up to $50,000, so it too will have to contend with Tesla.

Price: Not known.

Maxus

Importer: China Motors

Maxus is a brand of SAIC that sued to focus on commercial vehicles and is now also selling semi-premium electric models under the EUNIQ sub-brand. The brand's only private electric vehicle in Israel at the moment is a minivan that can carry seven people priced at under NIS 200,000 that currently has no competitors, although it is not clear how much potential there is in this market niche.

Price: About NIS 200,000.

BYD

Importer: Allied and Shlomo Sixt

BYD is one of the biggest makers of electric vehicles in China and it dominates the European electric bus market. The company plans to make its move in exports of electric cars with a Western standard in the second half of 2021. The two main models planned at the moment are two super-smart premium models with a long range, of up to 700 kilometers, and a great deal of futuristic technology. One is a large crossover and the second is a luxury sedan.

In China, these models compete successfully with Tesla, but in Israel they will face a considerable pricing problem. Still, we should not underestimate the marketing power of the importing group, consisting of Allied, one of the largest and strongest vehicle importers, and Shlomo Sixt, which leads the leasing market by a large margin. This combination could be the answer to the biggest problem of Tesla in Israel, which is high demand for electric cars in the leasing market that it cannot currently meet.

Price: Not known

Geely

Importer: Union Motors

Geely is the largest non-state-owned vehicle group in China, and it has a very active presence in Europe through its Volvo subsidiary. In 2022, it is expected to enter the Israeli vehicle market with its Geometry electric car brand, under which it produces cars with relatively long driving ranges and a good spec at an "affordable" price, which will probably be in the NIS 160,000-180,000 range for a basic model. A first vehicle for standards approval, in crossover format, is already in Israel.

Price: NIS 160,000-180,000.

Great Wall Motors

Importer: Hamizrach

This brand was one of China's pioneers in the Israeli vehicle market, and in its previous incarnation in Israel it mainly focused on rugged pick-ups. According to the announcement by the company in China, in early 2022 it is due to land in Europe with an advanced smart electric crossover with European standard approval to be sold under the group's premium Wey brand. As far as is known, the franchise still belongs to Hamizrach, importer of Jaguar and Land Rover cars, which imported Great Wall vehicles in the previous decade before the manufacturer decided to withdraw from Europe temporarily.

Price: Not known.

Published by Globes, Israel business news - en.globes.co.il - on April 6, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Great Wall Motors crossover  credit: PR
Great Wall Motors crossover credit: PR
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