European aluminium producer warns of impact from growing Chinese electric car imports

The European aluminium giant Norsk Hydro has expressed concerns about the rising influx of electric cars imported from China, indicating that this trend may significantly affect regional demand. Hilde Merete Aasheim, the CEO of Norsk Hydro, emphasized the company's attention regarding this potential threat.

During an interview with a British daily business newspaper, she said, “The fear when it comes to electric vehicles is imported into Europe and the impact on European car manufacturers. There is quite a steep curve right now. That is a threat we are following: if European automakers start reducing their demand for aluminium because they are outcompeted."

Her remarks underscore the far-reaching consequences of the increasing import of Chinese electric vehicles on European businesses involved in the automotive supply chain, spanning from raw material producers. Aluminium plays a crucial role in electric cars, being utilized in battery pack casings and various components to reduce weight and counterbalance the considerable heft of the batteries, ultimately extending the range of electric vehicles on a single charge.

A study commissioned by European Aluminium, a trade organization, found that, in 2022, the average electric vehicle manufactured in Europe contained 283 kilograms of aluminium, in stark contrast to the 169 kilograms found in conventional internal combustion engine vehicles.

In September, the European Union unveiled intentions to launch an investigation into subsidies supporting Chinese electric vehicles (EVs) that were deemed to be causing unfair competition in the European market and contributing to an overflow of Chinese EVs in global markets.

China has been constructing an excessive number of battery manufacturing facilities, surpassing what is required to satisfy domestic demand. Regional subsidies and loans have facilitated this expansion, and manufacturers are actively looking to direct the surplus production towards international markets.

European automakers are adopting different strategies in response to the growing threat posed by the electric vehicle (EV) market. Recently, Stellantis, the company that owns brands like Peugeot and Jeep, announced its plan to invest €1.5 billion for a 20 per cent stake in a Chinese EV startup called Leapmotor. This move aims to capitalise on the increasing influx of affordable Chinese-made EVs entering the European market.

According to Chinese customs data, China exported EVs worth $13.1 billion to Europe in the first seven months of 2023, a significant increase from $15.4 billion last year. However, it's important to note that most of these vehicles are Chinese-manufactured versions of Western brands, with Tesla being a prominent example.

The concerns about the demand for aluminium in Europe stem from recent challenges faced by the industry, such as the impact of soaring energy prices following the Ukraine-Russia geopolitical crisis last year.