Chinese Influence Grows in European Electric Bus Market
The European Commission's recent "Initiation of an anti-subsidy investigation concerning imports of new battery EVs originating in the People's Republic of China" introduced a pivotal definition in its executive summary.
According to Mika Takahashi, a technology analyst at IDTechEx, this document sets out the commission's aims regarding the investigation.
It specifies that the vehicles under scrutiny are battery electric vehicles (BEVs) that transport nine or fewer passengers. The definition means that the EU's investigation will target cars and not larger vehicles like buses, raising questions about the broader implications for the industry.
On June 12, 2024, the EU announced tariffs on Chinese EVs ranging from 17.4% to 38.1%. Mika explains that these tariffs are based on the belief that Chinese government subsidies create unfair competition, undermining the European automotive industry.
However, by excluding buses from these tariffs, the EU is leaving a significant portion of the market untouched.
While Chinese EV cars held an 8% market share in Europe in 2023, Chinese manufacturers accounted for 28% of the European electric bus market, according to IDTechEx's report, Electric and Fuel Cell Buses 2025-2045: Markets, players, technologies and forecasts.
Why are there so many Chinese electric buses in Europe?
Mika points out that 2023 was a record-breaking year for European electric buses, driven by metropolitan areas seeking cleaner, more efficient alternatives to diesel. With more than 5,000 sales in the EU and UK, the market has seen steady growth since 2013.
However, this figure is dwarfed by China's best year in 2016, when nearly 140,000 electric buses were sold. The key to China's success lies in substantial government subsidies and industry prepared for an electric shift, placing them decades ahead in electric bus adoption.
European bus manufacturers have needed to adhere to their traditional combustion engine legacy. Some major European OEMs did not introduce electric buses until 2019, despite growing demand fuelled by new emission-free zones and decarbonisation goals.
Additionally, the decrease in domestic demand in China due to the end of subsidies and market saturation has prompted Chinese manufacturers like BYD and Yutong to seek new markets abroad, with Europe being a prime target.
What will the absence of tariffs mean?
Mika emphasises that the presence of Chinese electric buses in Europe is likely to grow without tariffs: "The bus market is highly price-sensitive and fleet decisions are primarily driven by economics."
Chinese manufacturers have long been producing electric buses at scale, achieving cost reductions through economies of scale.
With their entire production process centralised in China, these manufacturers can also lower battery costs, the most expensive component of an electric bus, making their products more competitive.
Mika adds: "Even with tariffs, Chinese buses might still thrive due to market opportunities and the struggles of domestic OEMs, but the absence of tariffs will likely strengthen their position."
He also notes that even if tariffs were imposed, Chinese manufacturers are already setting up production in Europe. BYD has opened a factory in Hungary with the philosophy of 'built in Europe, for Europe,' and significant battery supplier CATL is also constructing a plant there. Yutong plans to source modules from this factory.
"Chinese influence extends beyond just the branding on the bus," Mika adds.
IDTechEx's report highlights how Chinese battery suppliers are establishing solid ties with European bus makers, particularly the global leader in Li-ion batteries, CATL.
The outlook for European OEMs
The challenges facing European OEMs are illustrated by a 2024 order for 92 BYD buses, worth US$47m (€43m), from the Belgian transit company De Lijn.
Mika asserts: "This was a significant blow to local manufacturers like Van Hool and VDL Bus & Coach, which have heavily invested in electric bus production."
Soon after, Van Hool filed for bankruptcy and a VDL spokesperson called for action from the commission, claiming that BYD benefits from heavy subsidies, creating an 'uneven' playing field.
The European bus market is still in its infancy, meaning there is potential for change. IDTechEx research shows that Chinese OEMs' market share in 2023 decreased compared to 2022, driven by a surge in German sales. MAN Bus & Truck and Mercedes experienced their best electric bus sales to date, with MAN topping the sales rankings with a 16% market share, according to IDTechEx's report.
"Have the Europeans finally caught up?," Mika wonders. The German market faced mixed fortunes in 2023 when the federal government announced a withdrawal of electric bus subsidies.
"Transport operators are now grappling with the increased costs of electric versus diesel buses," he concludes.
"In this environment, the most competitively-priced products will prevail and the absence of tariffs on these buses further benefits the prospects for Chinese OEMs."
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