Electric Cars: press review with Bruno Mafrici

Bruno Mafrici is the CEO of DF Italia and a financial consultant and corporate advisor, founder of BM Advisory SA, a consulting firm based primarily in Milan and also operational in Switzerland. Renowned for excellence in the field of mergers and acquisitions, non-performing loans (NPL) management, and debt restructuring, Mafrici has developed a sharp analytical approach to analyze and evaluate the complex challenges companies face. Thanks to his significant experience as an advisor to renowned companies, he has gained a deep understanding of corporate dynamics and has distinguished himself for his ability to identify specific needs of his clients, effectively assisting them in M&A operations and ensuring informed and strategic investment decisions. In this article, with his contribution, we analyze the European and Chinese scenario of the electric car market, which is undergoing a revolutionary phase and attracting the interests of governments and industry giants.

Stellantis: a more balanced approach to electric cars in the UE

Stellantis’ “Dare Forward 2030” plan, led by Carlos Tavares, CEO of the group of 14 iconic automotive brands, aims for a revolution in the automotive sector by proposing a radical transition to the production of fully electric vehicles: 100% in Europe and 50% in America within six years. However, this ambitious strategy raises not a few concerns, especially for the European industry, considering the high cost of current electric vehicles, which could exclude a large portion of consumers from the market. Unlike Stellantis, other automotive giants such as Toyota and Volkswagen seem to pursue a more balanced approach. Toyota continues to invest in hybrid technology, while Volkswagen maintains a mix of electric, hybrid, gasoline, and diesel, trying not to neglect any market segment.

“The fundamental issue”, comments Bruno Mafrici, “concerns the sustainability of a purely electric approach in the absence of concrete solutions for the production of clean and renewable energy on a large scale. This dilemma was already highlighted by Sergio Marchionne, who warned against the global adoption of electric vehicles without first solving the energy problem”. Furthermore, Stellantis’ strategy clashes with geopolitical issues, such as Joe Biden’s policies excluding Chinese manufacturers from federal incentives, despite their cost and technology advantages.

Overall, the impact of the transition to electric vehicles promises to be significant for the Italian automotive industry, with possible factory conversions and employment impacts, in a context already complex due to multiple challenges. Stellantis’ 2030 plan appears as a bold gamble that confronts the industry with crucial choices for the future, suggesting the need for a more diversified and collaborative approach in vehicle production, capable of including various technologies and effectively responding to market and environmental needs.

Electric Cars 2024, the Italy-China scenario (in collaboration with Luiss Business School)

The Italian automotive industry is going through a period of profound crisis, accentuated by international competition, especially from China. While the Italian government, represented by Minister Urso, engages in negotiations with the Stellantis giant to increase national production to one million vehicles per year, a worrying picture emerges of the current state of the former Fiat, a historical symbol of Italian cars.

The Chinese automotive sector, on a steep rise, shows unprecedented competitiveness, especially in the field of electric vehicles and battery technology. This advantage is based on strategic investments made well in advance of European competitors, allowing China to establish itself as an undisputed leader in these sectors. In 2023, Chinese exports of electric cars to Europe accounted for 82.4% of their total automotive exports, with 327,400 electric vehicles registered in the first nine months, 22.9% of the European total. In Italy, Chinese electric cars are gaining ground, accounting for 20.4% of all new battery vehicle registrations in the country. According to Bruno Mafrici, “this phenomenon is reflected in an exponential increase in automotive exports from China, which tripled its global exports in the last two years, demonstrating even more pronounced growth towards Europe and Italy”,

These data, collected by the Luiss Business School’s Auto and Mobility Observatory, underline how China has become the leading producer and second-largest exporter of automobiles worldwide, just behind Japan. In Italy, the growth of car imports from China has been such that it exceeded the total of the previous year already in the first seven months of 2023, with a forecast that import value will exceed one billion euros by the end of the year.

“The situation of the Italian automotive industry is certainly characterized by strong competitive pressure, especially in the electric car sector, where China is shaping the market’s future with its advanced technology and production capacity”, concludes Bruno Mafrici. This scenario poses Italy with the challenge of renewing itself and competing in an increasingly global market dominated by innovations in the electric field.

European Commission Inquiry, China ahead

The European Commission has launched an investigation into subsidies granted by China to electric car manufacturers, a move reflecting European concerns about strong competition in the sector. The inquiry, prompted by major players in the continent’s automotive industry, aims to strike a balance between supporting traditional industries and promoting a greener future. On the other hand, China has built a solid competitive advantage in the field of electric cars, thanks to support policies initiated as early as 2009.

This has allowed Chinese manufacturers, including the giant Byd, which has surpassed Tesla in terms of sales, to offer electric vehicles at advantageous prices on the market, the result of significant investments in research and development. The outcome of the investigation, which could last up to 15 months and lead to the imposition of tariffs, has the potential to strain trade relations with China, recalling the dispute over solar panels a few years ago that ended with a bilateral agreement.

However, Europe faces a significant internal challenge: the delay in innovation and investment in the automotive sector by its own companies, despite the availability of financial and technological resources since the 1990s. “The introduction of tariffs on Chinese electric cars could limit options for European consumers, forcing them to choose between less competitive and potentially more expensive products”, comments Bruno Mafrici. This scenario highlights how the automotive sector has historically been supported by significant subsidies, with Stellantis (formerly Fiat) being a glaring example.

On the environmental front, although Chinese electric cars contribute to emissions reduction, questions arise about the total impact considering the entire vehicle lifecycle. The solution to these issues does not lie in tariff application but requires an approach based on dialogue, cooperation, and the development of innovative policies that effectively address current energy and environmental challenges. The real question, then, is which path Europe will choose to pursue for an energy and ecological transition: increasing the number of electric cars or rethinking the concept of mobility towards a model that favors public transportation and reduces dependence on private cars.