what’s the buzz

in the automotive sector

EDITORIAL

Electric and Autonomous Vehicles are driving the biggest revolution in the automotive sector in history. It seems to be a chance not only for disruptors like Tesla, but also many new Asian car manufacturers to enter foreign markets. The change in technology is shifting geopolitical order. China has already become the biggest producer and exporter of vehicles globally and reaches for more, turning the whole table upside down. Asian producers have already acquired Volvo, Lotus, Jaguar and Land Rover and started their manufacturing operations in Europe.

ESTIMATED PASSENGER CAR PRODUCTION IN CHINA IN 2023 (IN MILION UNITS)

domestic sales export

So the bell is ringing for European automotive parts producers to find a new place in upcoming supply chains as many old brands struggle to keep up by takeovers (Opel by PSA), consolidations (Stellantis from FCA and PSA), technological alliances (Volkswagen-Ford, BMW-Tata, Mazda-Toyota, The Autonomous) and business cooperation (Renault-Nissan-Mitsubishi).

We try to catch a glimpse of the buzz in the automotive industry. Read the full story about how the tech revolution might benefit local manufacturers and what your car is going to be in 2030 and beyond. One thing is sure: it won’t be just a car, more like a computer on wheels.

THE STORY STARTED WITH $1.8 BILLION

VOLVO ACQUISITION BY GEELY IN 2010

DRIVEN BY INNOVATION

Geely committed to maintain Volvo’s independence as a premium brand. Volvo remained a separate entity, continuing its research, development and production. In 2010 Geely pledged significant investments in Volvo’s development, including technologies, vehicle models, and expansion of production infrastructure. Geely emphasized its commitment to preserving Volvo’s Swedish heritage and continuing its tradition of innovation and safety, which have been characteristic of the Volvo brand.

SPA PLATFORM

After the takeover, Volvo built a new floor platform called SPA (Scalable Product Architecture). The total cost of work on SPA (and the development of the first model based on it – XC90 II) amounted to $11 billion.

SPA is designed to be flexible and scalable, allowing it to be used to produce a variety of vehicle types, from compact cars to large SUVs.
The platform integrates modern technologies, including advanced safety, infotainment and drive systems, ensuring passenger comfort, efficiency and safety.
Thanks to its modular design, SPA enables the use of various drive systems, including combustion engines, hybrid and fully electric, which contributes to flexibility in production and meeting various market needs.
SPA provides improved fuel efficiency and performance while reducing emissions of harmful substances, which help to meet stringent environmental standards.

VOLVO IS NO LONGER A STATION WAGON BRAND

In the end of 2023 Volvo introduced SPA2, on which models EX90 and Polestar 3 are based. Nowadays Volvo sells almost only SUV and sedan cars based on SPA/SPA2.

Number of Volvo passenger car models sold in 2006-2023

SALES ALWAYS TELL THE TRUTH

Starting from the takeover Volvo sales finally started to grow.

Number of Volvo passenger cars sold in 2006-2023

VOLVO SALES GREW EVERYWHERE…

Number of Volvo cars sold in 1997-2022 in China, Europe and the USA

BUT MOSTLY IN THE FASTEST GROWING MARKET

It’s been a primal strategy for all automotive brands – if you want to grow, you have to grow in Asia. Globally, half of new car buyers are in China while the other half live in the remaining 194 countries.

GLOBAL NEW BUYERS

Global sales of passenger cars by region in 2005-2022

PREMIUM CARS FINALLY GOT PREMIUM QUALITY

Following Geely’s takeover, the industry was concerned about the quality and safety level of the new models. However, Swedish-Chinese cooperation resulted in a very solid and fruitful level of performance. Volvo is scoring highest marks in all of the most important quality rankings in the world.

European Car of the Year results:

EURONCAP

NORTH AMERICAN CAR, TRUCK, AND UTILITY OF THE YEAR:

DID IT ADD UP?

Yes. Volvo started earning money and the company’s valuation rose from $1.8 billion paid by Geely in 2010 to $23 billion in 2021’s IPO. Volvo Cars is listed on the Forbes Global 2000 ranking of the biggest public companies in the world. Market price declined over past few years opening questions about perspectives for future growth. But so far Geely proved to be a reliable and trustworthy partner. All the initial promises were kept and delivered. The doors to new partnerships were opened. And Geely’s taste for more is quite obvious.

KEY FINANCIAL FIGURES OF VOLVO CARS (IN MSEK)

PARTNERSHIPS WITH DAIMLER AND RENAULT

Recently Geely started several joint ventures. The ones with Daimler are aimed for global expansion using old brand sales network but also starting car sharing service in China. The companies will cooperate with new model of Smart construction and sales.

The Agreement with Renault will launch a powertrain technology company “Horse Powertrain Limited” including 17 engine plants and 5 R&D centers in 3 continents.

Volvo manufacturing expands
in Slovakia

In January 2022 Volvo Cars announced an investment of €1.2 billion in a new plant in Kosice, Slovakia. So far Volvo’s main manufacturing facilities were the Torslanda plant in Sweden (for northern Europe) and the Ghent plant in Belgium (for western Europe). With the new plant in Slovakia CEE will have its own construction site. It’s a significant sign of the region’s stepping up.

GEELY IN POLAND

Volvo’s Kraków Tech Hub positions Poland as a central player in the company’s global innovation efforts. Poland’s hub integrates Volvo’s long-standing safety legacy with future-forward goals, including enhanced driver assistance algorithms. It focuses on:

The hub’s expansion from 5,800 to 10,000 square meters will support over 500 specialists, emphasizing Poland’s strategic advantage in high-tech talent. Compared to other countries, Poland is increasingly seen as a critical market for Volvo, driving forward global advancements in automotive technology alongside hubs in other countries like Sweden, China, Singapore and India.

THE FUTURE WILL BE AUTONOMOUS

Volvo’s transformation is a great example of exploiting the Electric Vehicles revolution. There were several other achievers with Tesla on top. Also the government of Poland tried to catch this wave to create a national brand of electric cars. Time will tell how it ends, but one thing is sure: the new tech revolution is coming with Autonomous Vehicles entering the market. This story covers just the first chapter of EV’s disrupting the market and the shower is painfully cold (esp. for German brands). Let’s dive a bit into the Izera project, with a new trend in mind that we can’t be late for.

THE IZERA PROJECT

Geely is one of many Chinese automotive companies looking for a manufacturing site in Europe. Poland has a unique chance to build a partnership with a reliable entity ending with establishing a new, national brand – Izera. The company ElectroMobility Poland S.A. was set up in October 2016. Construction of the factory in Jaworzno was scheduled to start in 2024, and mass production in 2026 but after spending 580 mln PLN the project has been put on hold.

The plant could serve for Geely cars production as well but one side of the negotiation table is missing due to political discourse in Poland. The project was started by the former administration and the new one is still struggling to decide how to deal with it.

Izera was to be based on Geely’s Sustainable Experience Architecture used already in Volvo EX30, Smart and Zeekr X. Geely signaled an openness to build a second factory that will produce batteries and drive systems for electric cars. The Izera plan seemed to have no loose ends. Apart from not being executed. And as you may know, unfulfilled potentials don’t last, they fade away… or get done elsewhere.

FIRST STEPS OF
TURKISH IZERA

Two years after the Polish EV company was set up several Turkish companies started a joint venture aimed to produce Togg, a new, national automotive brand.

Togg was established in Gebze in 2018 as a joint venture of five Turkish diversified conglomerates: Anadolu Group, BMC, Kok Group, mobile operator Turkcell, and Zorlu Holding. The construction of an electric car has been a national goal set by President Recep Tayyip Erdogan.

GEMLIK CAMPUS

Already on 27th December 2019 the company unveiled two prototypes of a compact electric SUV and a compact sedan, both with estimated ranges between 300 and 500 kilometers. The vehicles’ styling was overseen by the Italian studio Pininfarina. The first production model was set to be a serial version of the SUV concept, scheduled for release in 2022.

On July 18, 2020, construction began on TOGG’s manufacturing facilities in Gemlik, located on the outskirts of Bursa. One year later, on July 18, it was successfully announced that the chassis frame of the C-SUV model had been produced using exclusively Turkish-made components. The start of mass production, as previously announced, was once again set for early 2022.

TOGG-FARASIS AGREEMENT

In October 2020, TOGG signed a collaboration agreement with the Chinese company Farasis. Farasis was to supply the battery cells, while the battery modules and packs were jointly developed and manufactured in Turkey. The collaboration also includes the development of energy storage solutions for Turkey and neighboring countries.

In April 2023, within Gemlik Campus Togg established the Siro Battery Development and Production Campus in partnership with Farasis. This $2.5 billion investment, located in the municipality of Gemlik in Bursa Province, is planned to produce 24 gigawatt-hours of battery capacity and 19.8 GWh of battery modules, employing 2,200 people.

IT TOOK ONLY FOUR YEARS FROM DESK TO MARKET

On October 29, 2022, the first vehicle, Togg T10X (segment C SUV), rolled off the production line. In 2024 the company started presales in the first foreign country – Germany.

In 2023, Togg delivered 19,583 vehicles, which accounted for 27% of all electric cars sold that year in Turkey (72,179 vehicles).

In January 2024, the company introduced its second production model, the T10F sedan, planning to begin production within a year, by early 2025. According to Togg’s CEO, Gürcan Karakaş, the company may achieve profitability as early as 2027. So far everything went as planned and probably according to public announcements already in January 2025 Togg T8X, a smaller, segment B, SUV will be presented.

WHO ELSE SUCCEEDED
SO FAR?

The story goes on to Spanish Barcelona, the capital of Catalonia region where in 2023 Chery Automobile Company Limited started a Joint Venture with Ebro EV Motors. The cooperation includes several projects aimed at strengthening Chery’s presence in Europe and accelerating the company’s technological development:

· Construction of a manufacturing plant of electric vehicles for the European market. The factory is scheduled to be launched in 2025 and will employ thousands of workers. The factory will be based on the infrastructure used so far by Nissan and acquired recently by the JV.

· Establishment of the European Innovation and Development Center (ERIDC): research and development center for electric drives, autonomous driving systems and connectivity. The center will employ hundreds of engineers and scientists from all over Europe.

· A multi-year sponsorship agreement with FC Barcelona, one of the most famous football clubs in the world. The Chery logo will be visible on the team’s shirts, and the company will have access to the image rights of players and coaches.

· Several showrooms in Barcelona and other cities in Spain to sell Chery electric and hybrid vehicles.

THE OTHER ACHIEVER IS HUNGARY

Hungary leads the way in the region with most promising cooperation with BYD. It’s not only Warren Buffet’s conviction that BYD will beat all competitors.

MARKET VALUE OF INDIVIDUAL CAR BRANDS I N 2008 – 2023 (IN USD MILION)

Hungary was chosen for its strategic geographical location in Central Europe, providing excellent logistical advantages for distributing vehicles across the continent. The country’s mature infrastructure and favorable business environment make it an ideal site for BYD’s first European EV factory. The facility in Szeged will be built on a 300-hectare site and feature advanced production lines with highly automated processes. The factory will not only assemble vehicles but also produce key components like batteries. This approach helps BYD control quality, reduce costs, and improve efficiency, reinforcing its competitive edge in the EV market.

BYD already operates an electric bus manufacturing plant in Komarom, Hungary. Together with the CATL and SAIC sites in Debrecen, BYD investment creates a local ecosystem for NEV production. Somehow it is a predominantly Chinease owned ecosystem.

SAIC IN DEBRECEN

SAIC Motor Corporation Limited is making significant strides in Europe with two substantial investments in Debrecen, Hungary. These projects mark the largest Chinese investments in the country, underscoring SAIC’s commitment to expanding its footprint in the European market, particularly in Central and Eastern Europe.

LAST BUT NOT LEAST

ASIAN CHAMPION IN THIS STORY IS TATA MOTORS

The company was founded in 1945 in Mumbai, and started building its presence in the automotive sector by joint venture with Daimler-Benz nine years later. After establishing dominance in India’s commercial vehicle market over the years, Tata Motors ventured into the passenger car market in 1991. It took another eight years to launch the production of Indica, India’s first fully indigenous passenger car.

In 2004, Tata Motors acquired the Daewoo truck manufacturing plant in South Korea and four years later Land Rover, Jaguar, Daimler, Lanchester, and Rover brands from Ford Motor Company for $2.3 billion.

The company gained significant prominence in 2008 when it announced plans to produce the world’s cheapest car, the Nano. Tata’s cars are primarily sold in Asia. In the EU they are available in Italy, Spain, Turkey, and since September 1, 2008, in Poland as well.

TATA’s EV expansion

In January 2023, Tata announced plans to start manufacturing electric vehicle cells in Europe to accelerate Jaguar’s transformation into a battery-powered car manufacturer.

In the same year, they announced the introduction of ten electric models by March 2026. By 2025, the company anticipates that electric vehicles will account for 25% of its total sales, up from the current 8%. Tata Motors aims to achieve a 30% share of the electric vehicle market by 2027-28, and subsequently increase this share to 50% by the end of the current decade. The plans look ambitious but only great dreamers are real doers.

Trade tariffs

One of the reasons to move EVs manufacturing from China is regulatory pressure. Washington, Brussels, Ankara accused Beijing of subsidising their automotive industry and imposed additional tariffs.

As a consequence guys from BYD, Chery, Geely, Dongfeng Motor, Xpeng and other brands are flying miles all over Europe and looking for the best places to invest in new factories. It would be nice to welcome them in Central Europe to uphold our piece of the automotive industry or maybe even climb the ladder one level higher.

TO SUM UP

Asian companies taking the local automotive market might seem like a grim scenario for the near future. But we see a way to benefit from Asian manufacturers expansion in Europe. Our partnership can bring mutual profits – CEE can open its industrial potential for Asian brands while they include local parts producers in their global supply chains. Aftermarket is not enough and dependance from the German automotive sector is too risky. We have to roll a dice to invent a new future with thriving partnerships in EVs and AVs production in CEE. A promising factor is an ambition to create separate supply chains for NEVs where strategic partnerships with CEE’s countries might work together. We started from a vision of computers on wheels and showed only the buzz about Electric Vehicles. Just round the corner another revolution awaits with Autonomous Vehicles taking the roads from our hands.