09May2023AllianzResearchPhotobyTomRadetzkionUnsplashtotheEuropeanTheChinesechallenge19Appendix13MappingtheChinesechallengefortheEuropeanautomotiveindustry04Electricvehicles:Reshufflingcardsintheglobalautomotivegame?automotiveindustryAllianzResearch•TheshifttobatteryelectricvehiclesisagamechangerfortheEuropeanautomotiveindustry.Alternativeenergyvehiclesalesreachedarecord-breaking4.4mnunitsin2022,representing47%ofallnewvehicleregistrationsinEurope.Batteryelectricvehicles(BEVs)ledtheway,withsalesboomingby+28%,representing12%ofallnewvehicleregistrations.Withthe2035phase-outofinternalcombustionengines(ICE)looming,theautomotivesectorisonthecuspofacompleteshakeup,facingatransformationofitssupplierbase,changingcustomerneeds,competitionfromnewentrantsandtherealityofalesscar-centricsociety.•ButthenumberoneriskisChina.Havingrecognizedthepotentialofelectricvehicles15yearsago,Chinahassinceinvestedvastresourcesinbuildingacompetitiveelectricvehicleecosystem.Asaresult,itnowleadstheglobalEVlandscape,sellingoverdoublethenumberofBEVsin2022comparedtoEuropeandtheUScombined,whilealsoholdingacompetitiveedgeinnearlyallaspectsoftheBEVvaluechain.Becausetheyaccountformorethan80%ofEVsalesintheircountry,Chinesebrandshaveseentheirmarketsharesclimbfromlessthan40%in2020tocloseto50%in2022,whilethecountry’sautomotivetradebalancewentfroma-USD31bndeficittoa+USD7bnsurplusoverthesameperiod.Atthesametime,alreadyin2022,threeofEurope’sbestsellingBEVswereChineseimports.AsBEVseventuallygrowtoaccountforallnewcarsalesinEurope,Europe-madecarsarelikelytobesubstitutedbythosemadeinChina–irrespectiveofwhethertheyaremanufacturedbyaChinese,AmericanorEuropeancompany.•EuropeancarmakerscouldcollectivelylosemorethanEUR7bninannualnetprofitby2030.IfChinesemanufacturersincreasetheirdomesticmarketsharesto75%by2030,totalsalesinChinabyEuropeancarmakerswouldfallby-39%,withlocalproductionfallingfromanestimated4.4mnunitsto2.7mnin2030.WealsofindthatifEuropeanimportsofChina-madecarsreach1.5mnvehiclesin2030,equivalentto13.5%oftheEU’s2022production,thevalueaddedimpactontheEuropeaneconomywouldstandatEUR24.2bnin2030fortheautomotivesector,theequivalentof0.15%oftheregion’s2022GDP.Buttheautomotive-dependenteconomiesofGermany,SlovakiaandCzechRepubliccouldfaceanevenbiggerhit(0.3%to0.4%ofGDP).•Whatcanpolicymakersdo?GiventhestrategicimportanceoftheautomotivesectorfortheEuropeaneconomy,policymakerscouldseekreciprocaltradetermswithChinaandtheUS,aswellaspromoteBEVadoptionthroughimprovedcharginginfrastructure.Moreover,allowingChineseinvestmentinlocalcarassemblycouldhavemorevalueaddedgeneratedintheregion,whileincreasingself-sufficiencyinrawmaterialscriticalforbatterymanufacturingandinvestinginnext-generationbatterytechnologieswillfurtherhelpEurope’sautomotivesectorpreparefortomorrow’schallenges.2SummaryExecutiveAurélienDuthoitSeniorSectorAdvisoraurelien.duthoit@allianz-trade.com09May20233PhotobyLorenzoiGerozaonUnsplashAllianzResearch4Electricvehicles:PhotobyLennyKuhneUnsplashReshufflingcardsinthe2022wasarecord-breakingyearforalternativeenergyvehiclesinEurope,withsalessoaringto4.4mnunits(+11%vs2021)despiteanoverall-5%declineinnewvehicleregistrations.Between2019and2022,themarketshareofalternativeenergyvehiclesclimbedfrom11%to47%(Figure1).Facingapotentialbanonsellinginternalcombustionenginecars(ICEs)by2035andtargetstocutemissions,carmakershaveintroducedarecordnumberofnewmodelsinEurope.Atthesametime,consumersareincreasinglyseekingoutlesspollutingoptions,andthegovernmentsubsidiesforlow-emissionvehiclesareboostingdemandfurther.globalautomotivegame?Batteryelectricvehicles(BEVs)inparticularareleadingtheway,withsalesboomingby+28%andnowrepresenting12%ofallnewvehicleregistrations,farabovethe6%reachedintheUS.Europeisdecarbonizingitsautomotiveindustryatarecordpace09May20235Figure1:EUnewvehicleregistrationbyfueltype(%)Sources:ACEA,AllianzResearchBox1:HowtheshifttoelectricvehiclesisreshapingcompetitioninEuropeDespiteitssuccess,Europe‘sapproachtowardsalternativeenergyvehiclesrepresentsariskygambleforitsdomesticcarindustry.Itentailsacompleteshakeoutofthesectorbytransformingitssupplierbase,changingtheneedsofitscustomers,leavingthedooropentonewentrants,redefiningthecompetitivegameandpreparingforalesscar-centricsociety(Box1).ThestakesarehighforEurope‘sautomotiveindustry:fouroutoffivecarssoldinEuropeareassembledlocally(i.e.thecoverageratioishigherthan80%).Europeisalsotheworld’sexportpowerhouseinthesector,withcartradegeneratingbetweenEUR70bnandEUR110bnintradesurplusfortheEuropeaneconomyeveryyearoverthepastdecade.AlongwithJapanandSouthKorea,theregiondominatesglobalcarexports,servingthetradedeficitsofmajoreconomiessuchasChinaandtheUS.Atamacrolevel,theautomotivesectorisEurope‘slargestsingleindustrialsector,accountingfor10%ofthevalueaddedofthemanufacturingindustry,withevenhigherpercentagesincountriessuchasGermany(15%),Hungary,CzechRepublicandSlovakia(closetoorabove20%).Theindustryalsohasastrongimpactonupstreamindustriessuchasmetals,plasticsandelectronics.TheimpactofelectrificationontheautomotiveindustryinEuropeissignificantandfar-reaching,affectingeveryaspectoftheindustry.UsingMichaelPorter’sframeworkidentifyingthefiveforcesshapingtheintensityofcompetitionwithinanindustry,weoutlinebelowhowtheshifttoEVsisreshufflingthecompetitivegamefortheEuropeanautomotiveecosystem.RelationshipswithsuppliersHistoricallyaccountingfor25%to30%ofacar’stotalcost,powertraincomponents(engine,transmission,exhaustandfuelsystemsetc.)arebydefinitionthemostimpactedbytheshifttoelectricvehicles.Electricpowertrainsaretypicallymuchsimpler,requiringconsiderablylessparts(nofueltankandinjectionsystems,noexhaustsystem,generallyasingle-speedtransmissionetc.),butfarmoreexpensive(30-40%oftotalvehiclecost),withbatteriesalonerepresenting20-30%ofthetotalvehiclecost.TechnologysubstitutionhassofarbeenthemostobviousandcriticalchallengefortheEuropeanecosys-tem,withprovidersoflegacytechnologies(turbo-compressors,fuelinjectionsystems,exhaustsystems)facinganexistenti-althreat.TheshiftawayfromdieselenginesisparticularlynotableasEuropewastheonlymajormarketwherepassengercarsusedtorunondiesel,creatinganaturalbarriertoforeigncompetitionmoreusedtopetrolengines.Whilecarmakersarelearningtoworkwithnewsuppliers,increasingsupplierconcentrationisbecomingacauseforconcern:Sixoutofthe10largestbatterymanufacturersarebasedinChinaandcontrolabouttwo-thirdsoftheglobalmarket.Thestrategicimport-anceofthebatteryhaspromptedsomecarmakerstoinvestheavilyintheirowncapacities,mostoftenthroughpartners-hipswithspecializedplayers.0%20%40%60%80%100%20192022PetrolDieselHEVBEVPHEVNGVOtherAllianzResearch6RelationshipswithcustomersElectrificationisalsoreshapingtheindustry’srelationshipwithitscustomers–inparticular,fleetcustomers(carrentalandcorporateleasingcompanies),whichaccountforover50%ofallcarregistrationsinEurope.BecausetheyhavetheirownESGagendas,rentalandleasingcompanieshavecommittedtoreducetheircarbonfootprintsandabidebyEurope’sgro-wingregulation.Inthisrespect,carmakersfailingtoadapttothechangingneedsoffleetcustomersfacetheriskoflosingmarketshareinthenearfuture.ThreatofnewentrantsElectrificationisamajoropportunityforaspiringnewentrants,whethertheyarestartingfromscratch(hundredsofelectricvehiclecompanieshavebeenlaunchedinthepastyears)ormovingfromICEstoelectricpowertrainstoincreasetheirmar-ketshares.ThethreatofnewentrantshasalreadymaterializedinEurope:WhileTeslawasvirtuallyunknowninthemarket10yearsago,itnowhasa2%shareoftheoverallEuropeanmarketanda20%shareofthebatteryelectricvehiclesegment.Aftermakingastrongimpressionatthe2022ParisMotorShow,ChinesecarmakersarealsorampinguptheircommercialpresenceinEuropeandbringingnewmodelstothemarket.ThreatofsubstitutesIrrespectiveoftheirpowertraintechnologies,privatevehiclesareexpectedtoplayalesserroleintheEuropeantransportmixincomingyears.Governmentsarelikelytoenactadditionalpoliciesandregulationsthatwillmakeowningandusingprivatecarslessappealing(restrictionsontheiruseinurbanareas,greaterincentivesforpublictransportandalternativemobilityoptions),therebyreducingoveralldemandfornewvehicles.CompetitiverivalryCarsarecomplexconsumergoods,withcompetitionbasedbothonprices(valueformoney)anddifferentiation(perceivedattributes)–analystsoftendistinguishbetweenthelowcost,massmarket,premium,performanceorluxurysegments.Hereagain,electrificationisagamechangerasregardsnon-pricecompetitionbychallengingthetraditionalfeaturesonwhichcarmakersandbrandshavebuilttheircompetitiveadvantages:•Performance:Electriccarsareredefiningperformancebecauseofthecharacteristicsofelectricengines.Ofallcharac-teristics,rangeisarguablythemostcriticalbecauseofthecomparativelylowperformanceofEVsvsICEsandthesubs-tantialgapbetweenentry-levelandhigh-endEVsasregardsmaximumrange.Potentialrangeneedstobeconsideredtogetherwithchargingspeeds,charginginfrastructurecompatibilityandenergyefficiency.Carmakerslaggingbehindcompetitionintermsofperformancefacetheriskoflosingmarketshares.Reflectingthepotentialadvantagefromacomparativelywiderandfasterchargingnetwork,carmakershavealreadyinvestedbillionsinproprietarycharginginfrastructureinEurope.•Design:Electricvehicleslooksimilarforareason–inparticular,positioningthebatteryonthefloorallowscarstohavealowcenterofgravityandoptimalweightdistributionatthecostofagenerallyhigherstancecomparedtoICEs,comingontopofhighergroundclearancetoprotectthebatteryfrompotentialshocks.Tocompensatefortheadverseimpactonvehicleaerodynamicsandperformance,EVsoftenhaveaslicklooktoreduceairresistance.Overall,cardesignmaymakelessofadifferencethanitusedtountiltheindustrycomesupwithbatterydesignsthatallowgreaterflexibility.•Reputationandbrandimage:Theextenttowhichcarmakersandtheirbrandportfoliocancontinuetoleverageattri-butesbuiltovertimewithICEswhilesellingEVsremainstobeseen.Commonvaluesusedbycarmakersincludeperfor-mance,technology,reliability,safetyanddesign–asdiscussedabove,thoseproductattributesarebeingchallengedbytheadoptionofelectrictechnologies.AnecdotalevidencefromtheChinesemarketshowsconsumersarewillingtopaypricesmoretypicalofforeign,premiumvehiclesfromwell-establishedbrandsforhigh-performancevehiclesfromcompanieswithlittletonobrandhistory.ThefactthatthevastmajorityofcarmakersarecomingupwithnewcarnamesforthesuccessorstotheirhistoricalICEmodels,andsometimeswithnewcarbrandnames,alsosuggestthatelectrificationreallyisagamechangerforreputationandbrandimage.Becauseofnewentrants,competitivewillincreaseinthecomingyears,forcingcarmakerstoinvestevenmoretobetterdif-ferentiatetheircars.Meanwhile,pricecompetitionwillalsointensifyaselectricvehicleswillnolongerbeanichesegmentcommandingasubstantialpricepremiumtothestandardoffering.09May20237Despiteitsrapidgrowth,Europe’sadoptionofalternativeenergyvehiclescomesonlysecondintheworld–andadistantsecondatthat.In2022,morethan5.4mnbatteryelectricvehicles–two-thirdsoftheworldtotal–wereregisteredinChina,+83%from2021.Alternativeenergyvehiclesaccountfor20%oftotalregistrations(Figure2).Figure2:Batteryelectricvehicleregistrationsintopmarkets(2022)Sources:ACEA,CAAM,AllianzResearch.Chinaisdoublingdownonelectricvehicles…MuchlikeinEurope,soaringEVpenetrationreflectsamixofgrowingconsumerinterestinelectriccars,nationalandregionalpurchase-subsidyschemesandnewmodelscomingtothemarket,coveringthecityandcompact-carsegments.Box2:40yearsplayingcatch-upwithinternationalcompetitionChina’soldestcarmakerstracetheirrootsbacktothe1950sand1960sbutonlygainedtractioninthe1980swhen,follo-wingtheexamplesetbySouthKorea,theybegantolearnfromforeignfirmsthroughtheassemblyofknock-downkitssup-pliedbyEuropeanandUSautomotivecompanies.The1994IndustrialAutomotivePolicywentfurtherbyallowinggreaterforeigninvestmentinthesectorwiththepossibilityforinternationalmanufacturerstohaveamaximumoftwo50:50jointventureswithadomesticmanufacturer.Thepolicywaswellreceivedbyforeigninvestors,withJapanese,EuropeanandUScompaniesinvestingmassivelyandhelpingpropeldomesticproductionfrom1.4mnvehiclesin1994to13.8mnin2009,theyearthecountryovertookJapanandtheUSastheworld’slargestproducerofmotorvehicles.However,foralltheirsuccessinboostinglocalproduction,anddespitetechnologytransfersandsubstantialimporttariffs(25%)onforeignvehicles,intheearly2010s,Chinesecarmakersstillsufferedfromasignificanttechnologyandqualitygap,translatingintoaUSD25bntradedeficitandforeigncompetitorscontrolling70%ofdomesticcarregistrations.Electricvehicleswereidentifiedasthefuturecompetitivebattlegroundinthelate2000sChineseauthoritiesrecognizedthepotentialofEVstoaddressothercriticalissuessuchasairpollutionandenergysecurity.ButsupporttoEVswasalsoclearlyidentifiedasamajoropportunityforthedomesticindustrytoleapfrogfrombeingatier-twocountryinlegacyenginetechnologiestoaleaderinalternativeenergytechnologies.Amajormilestonewasapilotprogramlaunchedin2009called“TenCities,ThousandVehicles“encouragingtheadopti-onofEVsandthedevelopmentofthedomesticEVindustrybyprovidingfinancialincentivesforEVbuyers,encouraginggovernmentfleetpurchases,supportingthedevelopmentofcharginginfrastructureandpromotingresearchanddevelop-mentinEVtechnology.Initiallyrolledoutinfivecities,thepilotwasfoundpromising,progressivelyextendedtomorecitiesandultimatelyimplementednationwide.Byplacingaspecificemphasisonthedevelopmentofwhatitcalled“newenergyvehicles”(hybridelectric,batteryelectric,fuelcellvehicles),the12thfive-yearplan(2011-2015)andthe2015MadeinChina2025planhavealsobeeninstrumentalinshapingthecurrentChineseEVecosystem.Muchlikefortheotherninecriticalindustriesidentified,theobjectivewastomoveawayfromlowvalue-addedmanufacturingandtoincreasetheshareofChineseinputsinexportedgoodsthroughofmixoffinancingandfiscaltoolsfavouringdomesticcompanies.Theplaniniti-allysetnon-bindingobjectivesof1mnnewenergyvehiclestobeproducedby2020and3mnby2025,bringingtheshareofnewenergyvehiclesto20%ofallvehiclessales.Allthreetargetsweremetinadvancein2017,2021and2022,respectively.0%5%10%15%20%25%0123456ChinaEUUSUnits(million,LHS)%ofregistrations(RHS)AllianzResearch8...andrecapturingthedomesticmarket…China‘srapidadvancementsinelectricvehiclesaretransformingitsdomesticmarket,whereforeignauto-makershavetraditionallyheldadominantposition.Inahistoricfirst,Chineseautomakersreachedparitywithforeignbrandsin2022andsurpassedtheminQ4,cap-turing51%ofthemarketshare(Figure3).Theirshareinelectricvehiclesalonestoodat80%andshowednosignofabatementinQ12023.ThemainfactorsexplainingthegrowingpopularityofChinesebrandsintheChinesemarketinclude:•AstrongcostadvantageforBEVmanufacturingba-sedonthebiggervolumesoftheChinesecarmarketandacompetitivesupplierbase(criticalmetalrefi-ning,batterycellandmodulemanufacturingetc.).Pastpurchase-subsidyschemeswerealsorestrictedtoChina-madevehicles.•AwiderrangeofavailableBEVs(cityandcompactcarsinparticular)comparedwithinternationalcompe-titors,whichhavesofarmostlyfocusedonlargeandexpensivesedansandsportutilityvehicles.China’smostpopularBEVisafour-seatcitycarmanufacturedbyaUS-Chinesejoint-venturethatisavailablefortheequivalentofEUR4,300.•PositiveproductreviewsandcustomerreceptionforChina-brandedEVsresultingingoodbrandrecog-nition,incontrasttothemorenegativeperceptionsassociatedwithChineseinternalcombustionenginevehiclesinthepast.Figure3:Batteryelectricvehicleregistrationsintopmarkets(2022)Sources:CAAM,AllianzResearch0%10%20%30%40%50%60%20152016201720182019202020212022MarketshareofChinesecarmakersinpassengercarregistrationsMarketshareofNEVintotalsales09May20239Figure4:ChineseregistrationsofimportedEuropeanvehiclesSources:Bloomberg,AllianzResearchAsthepopularityofelectricvehiclesgrows,Chinesecompaniesareexpectedtoexpandtheirmarketshareaccordinglyby2030andsqueezeforeigncarimports.BecausetheyrepresentmorethanhalfofChina‘scarimports,Europeanautomakersfacethegreatestrisk.Europeantradefigurescanbesomewhatdeceptive–exportsdidhitarecordhighofEUR24bnin2022,butthissurgewasmainlyduetoacatch-upeffectandfavorablepricing.AnalyzingChinesecarregistrationdataforimportedmodelsfrommajorEuropeanautomakerstellsadifferentstory:Importedvolumeshavebeendeclininginrecentyears,dippingbelow500,000in2022(Figure4).Overthepastdecade,themarketshareofEuropeanimportshasdroppedfromanestimated2.9%to1.8%oftotalregistrations.…puttingEUR24bnofEuropeancarexportsatrisk…0%1%2%3%4%-200,000400,000600,000800,0002013201420152016201720182019202020212022Imports(unit,LHS)%ofregistrations(RHS)…andmorethan4mnvehiclesfromSino-Europeanjoint-venturesThesurgingpopularityofChinesepure-playautomakersisalsojeopardizingtheoperationsthatEuropeancarmakershaveestablishedinChina–mostlyjointventures,butalsoafewmajority-controlledsubsidiaries.Accountingfor85%ofEuropeanautomakers‘salesvolumesintheChinesemarket,localsubsidiarieshavegenerallylaggedinadoptingelectricvehicletechnologycomparedtotheirpure-playcounterparts:Ofthe20mostpopularelectricvehiclessoldinChinain2022,onlyoneismanufacturedbyaSino-Europeanjointventure.Inthefaceofflat,thendecliningmarketshares(Figure5),Europeancarmakershavetakenoppositestances,consideringtheChinesemarkettoodifficulttocrackandwithdrawingentirely,orconverselydoublingdownonlocalmanufacturingtoimprovelocalcompetitiveness.AllianzResearch10ThegrowingcompetitivenessofChina’sautomotiveindustryisbestreflectedinitsbilateralautomotivetradewiththerestoftheworld.Lookingatproduct-leveldataprovidedbyChinesecustoms,wefindconfirmationthatChinesecarimportsfellfrom1.2mnunitsin2017to0.9mnunitsin2022–a-30%dropinamarketdownbyonly-6%.Evenmorestriking,thetradebalanceinvaluetermswentfromaUSD37bntradedeficittoUSD7bntradesurplusoverthesameperiod,showingthatrisingChinesecompetitivenessisnotonlyallowingthecountrytobecomemoreself-reliant,butalsotoexpandininternationalmarkets(Figure6).Figure5:ChineseregistrationsoflocallymanufacturedEuropeanvehiclesSources:Bloomberg,AllianzResearchestimates0%10%20%30%02462013201420152016201720182019202020212022Locallymanufacturedvehicles(millionunits,LHS)%ofregistrations(RHS)TradedatashowsgrowingChinesecompetitivenessininternationalmarketsWhileChinesemanufacturersusedtofocusontheneedsofotheremergingeconomiesinAsia,theMiddleEastandLatinAmerica,itisEuropeanmarketsthatcontributedthemosttoboomingexports,jumpingfromanestimated8%shareofexportsin2017toa28%sharein2022.LookingatEuropeanstatisticstocheckforconsistency,wefindconfirmationofasignificantboominimportsofChina-madecars,with,forthefirsttimeever,Europe’svehicletradebalancemovingintonegativeterritoryinDecember2022.Figure6:China’sautomotiveinternationaltrade(billionUSD)-100-500501002010201120122013201420152016201720182019202020212022ImportsExportsTradebalanceSources:ChinaCustoms,AllianzResearch09May202311ToassessthepenetrationofChina-madecarsatamicro-level,westudythebest-sellingvehiclesof2022forEurope’slargestautomotivemarket,Germany(Box3).Lookingattheirrespectivecountriesofassembly,EuropeanandAmericancarmakersarepushingmade-in-ChinacarsinEurope…wefindthatthreeoutthe10best-sellingBEVswerefullyorpartiallyimportedfromChina,andjustfivemodelsfromfourEuropeanandAmericancarmakersdominateregistrationsofChina-madeBEVsinEurope.…whilemostChinesebrandsareonlyrampinguptheiroperations.OnlyoneChina-brandedBEVmadeittoGermany’stop50best-sellingmodelsin2022:MostChinesecarmakersarestillatanexploratorystageinEurope’slargestautomotivemarket.LookingmorecloselyatdataforQ12023,however,wefindthatprogressisclear,withsixChinesecompaniesnowsellingBEVsinGermanycomparedtoonlytwooneyearago,andthemarketshareofthosecompaniesnowaccountingfor3.7%ofallBEVsalesinGermany,vs1.2%oneyearago.WithChineseplayersaccountingfor15outthe90BEVsavailableintheGermanmarket,salesarepoisedtogrowatafastpacein2023andincomingyears.Tappingintoanewmarketintheautomotiveindustryrequirestimeascarmakersmustnavigatethroughtypicalramp-upphasesincludingregulatorycompliance,localization,establishingsalesnetworkswithimportersanddealershipsandbuildingbrandawareness.Box3:MappingthecurrentBEVofferinginGermany,Europe’slargestcarmarket#1EVsavailablefromcitytosportscarsthroughSUVsandcompacts.AsofMarch2023,90differentmodelswereavai-lablefororderinGermany,pricedbetweenEUR22,000andEUR218,000.Halfofthemarecompactcarsorsmaller.#2OnlyafractionofavailablemodelsareEVs.EVsaresoldunder37differentbrands,meaningtheaveragebrandofferstwotothreedifferentelectricmodels.BrandsaffiliatedwithdominantautomotivegroupsinEuropetendtohaveabroaderoffering.#3Newtechnologymeansnewentrants.Outofthe37brands,nineofferbatteryelectricvehiclesexclusivelyinEuropeandhadlittletonocommercialpresenceinthemarket10yearsago.#4Newentrantsmeanneworigins.Fivefull-electricbrandsareChinese,threeareAmericanandoneisEuropeanwithaparentChinesegroup.19outofthe90carsareexclusivelyassembledinChina,andanother11haveassemblyoperationsbothinChinaandEuropeorNorthAmerica.#5ManyAsian-importedEVsamongbest-sellers.Outofthe10best-sellingEVsinGermanyin2022,oneisimportedfromSouthKorea,onefromChinaandtwobothmanufacturedinEuropeandNorthAmericaaswellasChina.#6EVscomewithahighpricetag.Themedianpricetagforoneofthe90EVsavailablestandsatEUR51,000–comparedwithanaverageEUR30,000toEUR40,000foranewvehicleinEurope’slargestmarkets.AffordabilitywillbecrucialtomeetEVpenetrationtargetsby2035.AllianzResearch12Box4–HowtheUSInflationReductionAct(IRA)makesEuropeatargetforChineseexportsAkeyreasonforthegrowingpenetrationofChina-madeandChina-brandedvehiclesinEuropeisitscomparativelygreateropennessforimportedelectricvehicles.Despitebeingtheworld’ssecond-largestmarketformotorvehiclesandrunningahugetradedeficitforcars,theUSissettobeamuchtoughermarkettocrackforChinesevehiclesinlightoftheUSInflationReductionAct(IRA),whichwillgreatlyencourageautomotivemanufacturinginNorthAmericathroughtwomainprovisi-ons:•Productiontaxcreditsforthemanufacturingofawiderangeofcleanenergycomponentsandcriticalminerals(“NewAdvancedManufacturingProductionTaxCredits”)includingelectricbatterycellsandmodulesusedinelectricvehicles.•TaxcreditsworthuptoUSD7,500forthepurchaseofanEVassembledinNorthAmericaandmeetingcertaindomesticcontentrequirementsformineralsandcomponentsand,startingin2024,exclusivetoso-called“entitiesofconcern”(includingChina).Whiletheformerprovisionwillonlyplayoutprogressivelyasdomesticandforeigncompaniesinvestinlocalmanufacturingcapacities,thelatteriscreatingastrongandimmediateadvantageforlocallyassembledvehiclesandanexplicitbarriertoChinesesuppliersandcarmakers.IRAprovisionscomeontopofasignificantimportdutygap:Chinesevehiclesfacea10%importdutyrateinEuropebuta27.5%rateinheritedfromtheTrumpAdministrationintheUS.ChinesecompetitionwillpaveabumpyroadforEurope’sautomotiveindustryWeidentifytwomainchannelsbywhichChina’sriseasacompetitiveautomotivemanufacturinghubcouldimpactEurope’sautomotiveindustry:•GrowingcompetitivenesswillhelpChinesemanufacturersgainagreatershareoftheirdomesticmarkets,jeopardizingthesalesandprofitsofforeigncompaniesoperatinginChina,eitherthroughlowerexportsorlowersalesfromtheirChinesesubsidiaries.Asevidencedbythe80%marketsharecontrolledbyChinesebrandsinChineseelectricvehicleregistrations,mostinternationalcompetitorshavebeentooslowtoembracetheshifttoEVsinChina.LookingattheirannouncedEVpipelinesfortheChinesemarket,weobservethatonlyahandfulofcarmakersareplanningincreasingcommitmenttotheChinesemarket.AsscaleandtechnologyhelpEVsreachpriceparitywithICEsovertime,wedonotseeabusinesscaseforaforeigncarmakersellingsubstantialvolumesofICEsinthecountry.Rather,wewouldexpectmoreinternationalcarmakerstowithdrawfromChinaincomingyears–atrendalreadyatplay.•Themandatoryshifttoaproductmixwherebatteryelectricvehicleswillaccountforvirtuallyallnewcarsalesby2035inEuropewillfavourapartialsubstitutionofEurope-madecarsbyChina-madecars–irrespectiveofwhetherthosecarsaremanufacturedbyaChinese,AmericanorEuropeancompany.AlookattheproductpipelinesofEuropeanandAmericancarmakerspointtoaminimumof11newmass-market,China-madeBEVstobelaunchedinEuropeby2025,andanadditionalthreeChinesecarmakershaveannouncedtheywillbegincommercialoperationsinEuropeasearlyas2023,bringingthetotaltonine.AsdiscussedinBox4,theopennessoftheEuropeanmarketmakesitfarmostinterestingforChineseexportsthantheAmericanmarket.09May202313PhotobyObi@Pixel7PropixonUnsplashMappingtheChinesechallengefortheEuropeanautomotiveindustryTohelpquantifythestakesatplay,wesimulateapossible2030scenariowhereChinesemanufacturersmanagetoincreasetheirdomesticmarketsharesto75%–consistentwiththetrendatplaysincesalesofnewenergyvehiclesbegantosoarandourexpectationsofforeigncompetitorsleavingthemarket.Meanwhile,importsfromChinaclimbto10%ofallcarsalesinEuropeasthecontinentgoeselectric,withBEVsreachingan80%marketshareforallpassengercarsales.ExportsarefirstpushedbyinternationalcarmakerswithamanufacturingfootholdinChina,thenbyChineseWhatifChinesebrandscapture75%oftheirdomesticmarketandChina-madecars10%oftheEuropeanmarketby2030?competitorsthatarefinishedbuildingtheircommercialpresenceinEurope’slargestmarkets.TheprecedentsfromJapanesecarmakersintheUSin1970s(Box5)orSouthKoreancarmakersinEuropeinthe2000s(Box6)showexportsalonecanbeenoughforcompetitivecarmakerstosecureasignificantmarketshareininternationalmarketsWeemphasizethatthisscenarioisnotaforecastbutratheraplausiblecasetoillustratepotentialdevelopmentsintheautomotiveindustry.Variousfactors,includingchangesingovernmentpoliciesandgeopoliticalinfluences,couldsignificantlyimpacttheactualoutcome.AllianzResearch14Inthisscenario,totalsalesinChinafromEuropeancarmakerswouldfallby-39%,withlocalproductionfallingfromanestimated4.4mnunitsin2022unitsto2.7mnunitsin2030,andexportsfrom480,000to290,000units.TheimpactineurotermswouldbemoredifficulttoassessasEuropeancarmakersdonotreportoperatingornetprofitonageographicalbasis.However,theircombinedChinesesalesamountedtoabout22%oftheirglobaldeliveries.AssumingtheiroperationsinChinaareasprofitableasthoseinothermarkets,22%oftheircombinedEUR67bninnetprofitfor2022bringsthenetprofitatrisktoEUR14.7bn.Because50-50jointventuresstillaccountforthebulkoftheirlocalsales,atleastEUR7.3bnofthatEUR14.7bncanbeattributedtoEuropeancarmakers.EuropeancarproductioninChinacoulddeclineby1.7mnvehicles(-37%)andthreatenEUR7bninannualnetprofits……andChineseimportscouldclimbto1.5mnvehiclesandthreaten13%ofEuropeanproductionInthesamescenario,Chineseexportswouldreach1.5mnvehiclesin2030,equivalentto13.5%oftheEU’s2022productionorthecombinedoutputoftheregion’sthreelargestautomotiveassemblyfactories.SincetheEuropeanmarketisbyandlargeautonomous,risingChineseimportswouldtakeabiggertollonlocalproductioncomparedwithcompetingbutmodestimportsfromJapanandSouthKorea.GreaterrelianceonimportswouldlowerthecapacityutilizationratesofEuropeanfactories,weighontheirprofitabilityandencouragefurthercapacityeliminations.Overthepast10years,adozenassemblysiteswereshutdowninEurope,reflectinggreaterconsolidationamongcarmakersandtheexitofsomeAmericanandJapanesemanufacturers.EUR24bnindirectautomotivevalueaddedatrisk,0.15%oftheregion’sGDP…Addingexportlossestodomesticproductionlosses,andfactoringinEUR14,200ofvalueaddedpervehiclemanufacturedinEUin2019asaproxy,thevalueaddedimpactontheEuropeaneconomywouldstandatEUR24.2bnin2030fortheautomotivesector,theequivalentof0.15%oftheregion’s2022GDP.ThisEUaveragemasksimportantvalueaddedconcentrationinjustafewcountriesandregions.BreakingdownEuropeanvalueaddedbycountry,weareremindedthatGermanyistheregion’spowerhouse,aloneaccountingfornearly60%oftheregion’svalueadded(Figure7).09May202315Figure7:ValueaddedfromtheEuropeanautomotiveindustrybycountry(2019data,%)Sources:Eurostat,AllianzResearchFigure8:Lostautomotivevalueaddedexpressedasapercentageof2022GDPSources:Eurostat,AllianzResearchInthisrespect,thesame0.15%impactonEuropeanGDPhasaverydifferentmeaningforcountrieswheretheautomotiveindustryplaysacomparativelylargerrolein0.0%0.1%0.2%0.3%0.4%0.5%SlovakiaCzechiaGermanySwedenPolandSpainItalyFrancetheeconomy–theimpactwouldbemorethantwicetheEuropeanaverageforcountriessuchasSlovakia,CzechRepublicandGermany(Figure8).…andagooddozenmoreamongsuppliersoftheautomotiveindustryOurestimateonthedirectimpactontheautomotiveindustrydoesnotfactorinthestrongknock-onimpacttheindustryhasonotherindustrialandservicesactivities.UsingtheOECDTradeinValueAdded(TiVA)database,wefindthatfinaldemandgeneratedbytheEuropeanautomotiveindustrygeneratedEUR155bnofvalueaddedforotherEuropeansectorsin2018,ofwhich:•EUR53bnwasforothermanufacturingactivities,includingEUR19bnformetals,EUR8bnformachineryandequipment,EUR7bnforrubberandplastics,EUR5bnforelectronicandelectricalequipmentandEUR4bnforchemicals.•EUR102bnforservices,includingEUR16bninsupportservices(R&D,consultingetc.),EUR12bnintransportandstorageservices,EUR4bninITservicesetc.(Figure9)58%6%6%5%5%4%3%2%11%GermanyItalyFranceSpainCzechiaSwedenPolandSlovakiaOthersAllianzResearch16Figure9:ValueaddedfromtheEuropeanautomotiveindustryforselectedotherEuropeansectors(2018data,billioneuros)Sources:OECDTradeinValueDatabase,AllianzResearchBox5:TheriseofSouthKoreanbrandsintheEuropeanmarketTheSouthKoreanmotorvehicleindustrygrewinthe1960s,withtheinitialimpulsecomingfromthe1962AutomotiveIn-dustryPromotionLaw.Throughamixoftradepolicyandgovernment-supervisedlicensingagreementsandjointventures,domesticcarmakersemergedbyassemblingsemi-knocked-downpartsprovidedbyJapaneseandAmericancarmakers.Governmentsupportwaslaterinstrumentaltoincreasetheshareofdomesticcontentinlocallyassembledvehicles–whichmaterializedinthe1975bythelaunchofthefirstKorea-designed(withinternationalpartners)andmanufacturedpassen-gercar–andtoencourageexportstoNorthAmericaandEuropeinthe1980s.SouthKoreanbrandsbecamemainstreaminEuropeinthesecondhalfof1990swiththepromiseofaffordablevehicleswhosequalitybecameclosetothelocalentry-leveloffering.Aftergoingthroughconsolidationintheaftermathofthe1997Asiancrisis,theymanagedtosecureanestimated4%shareoftheEuropeanpassengercarmarketin2005justthroughex-ports.Inthemiddleofthedecade,theytookmajorstepsbyopeningEuropeanresearchanddesigncenters,designingve-hiclesspecificallyforEuropeancustomersandopeningmanufacturingfacilitiesinCzechRepublicandSlovakia.Combinedwitheffortstomoveupmarketandsubstantialinvestmentinmarketing,theirstrategywasmetwithcommercialsuccess,withtheirmarketssharesincreasinggraduallyandreachinganall-timehighofabout9%in2021.Exportsareestimatedtoaccountforover40%ofSouthKoreancarssoldinEuropeandwereatrecordhighsin2022,partlydrivenbypopularelectricvehiclemodelsprimarilyassembledinSouthKorea.05101520253035Wholesaleandretailtrade;repairofmotorvehiclesBasicmetalsandfabricatedmetalproductsTransportationandstorageProfessional,scientificandtechnicalactivitiesRubberandplasticsproductsITandotherinformationservicesChemicalandchemicalproductsComputers,electronicandelectricalequipmentEliminatingthesame14%oflostautomotiveproductiononthevalueaddedgeneratedbytheautomotiveindustryinothersectorswouldamounttoanextraEUR21bninlostvalueaddedfortheEuropeaneconomy.Note,however,thatthisisanupperboundestimate,giventhatsomeservicessuchasretailareprovidedirrespectiveoftheactualplaceofcarassembly.Conversely,becausesupplychainstendtobelocal,lostcarassemblyactivitieswouldbefeltmoreonupstreamindustries(metals,plastics,chemicals,electronicsetc.).09May202317Figure10:SalesofJapan-brandedcarsintheUSSources:BEA,Jama,AllianzResearchBox6:Japan’sforayintotheAmericanmarketJapanbeganexportingpassengervehiclestotheUSinthelate1950s,butitwasnotbeforetheendofthe1960sthatJapa-nesemanufacturersgrabbedasizableshareofthelocalmarket.Amajorturnofeventwasthe1970CleanAirAct,whichsetforthamandatory90%cutinpollutingemissionsfromnewcarsby1975.Togetherwithsoaringgasolinepricesinthewakeofthe1973oilcrisisandthesubsequenteconomicrecession,thisshiftinlegislationprovidedahugeboosttoJapane-secarmakerswhoselighter,morecompactandfuel-efficientvehiclesprovedpopularamongUScustomers.TheirshareinUSregistrationsjumpedfrom3%inthe1970sto7%in1975and20%in1980despiteimportstariffsandnolocalmanufactu-ringpresence.Meanwhile,USemploymentinthemotorvehiclesandequipmentsectorfellfromahighof1.1mnin1979toalowof650,000in1982.Theimplementationofso-calledvoluntaryexportrestraintsattherequestoftheUSAdministrationin1981contributedtocapJapanesecarexportsandencouragethecreationof“transplant”factoriesownedbyJapanesecarmakersonAmeri-canterritorystartingin1982.ThemovedidnotpreventJapanesecarsfrombecomingevenmorepopular,withtheirmarketshareoscillatingbetween19%and25%throughthedecade.JapanesemanufacturersinvestedheavilyintheirAmericanmanufacturingfacilities.Bytheendofthedecade,vehiclesassembledlocallyaccountedfornearly40%ofJapanesecarsalesinthecountryandemploymentreturnedtoabout80%ofitspastpeak.0%10%20%30%40%01,000,0002,000,0003,000,0004,000,0005,000,0006,000,000196819701972197419761978198019821984198619881990199219941996199820002002200420062008201020122014201620182020ExportstoUS(units)OverseasproductioninUS(units)%USmarket(rhs)PhotobyVladTchompalovonUnsplashAllianzResearch18¹SeeTransportinazerocarbonEU:pathwaysandopportunitiesInanindustrycharacterizedbylongproduct-developmentandcommercialcycles,itisclearthatChina’sleadintheglobalEVracewillnotbebridgedby2030.However,theextenttowhichEuropecankeeppacewithgrowingChinesecompetitionisuptoEuropeanpolicymakersandtheindustryitself:•Asexplainedpreviously,Europe’sBEVmarketiscomparativelyfarmoreopenthanthoseofChinaandtheUS,wherenationalorregionalassemblyisapre-requisitetoqualifyforpurchasesubsidiesandimportdutiesonforeignvehiclesarehigher.Seekingreciprocityintradeterms,notjustwithChinabutalsotheUS,shouldbeaprioritytohaveamorelevelplayingfieldfortheEuropeanindustry.•BecauseChina’scostadvantageliesinpartinthesizeofitsdomesticmarket,EuropeshouldalsoensurethebestpossibleenvironmentfortheadoptionofBEVs–notjustthroughsubsidies,butalsowithextensiveandhigh-performancecharginginfrastructurethatwouldallowelectricvehiclestousesmaller,lighterandlessexpensivebatteries.Well-performingcharginginfrastructurewouldlowerthepricetagfortheaverageBEVandconvinceusersinlessurbanizedareastomaketheswitch.Inourpreviousreport,weestimatedthenecessaryinvestmentincharginginfrastructureatEUR13.4bnperyeartomeetEurope’sFitFor55target¹.•IfEuropestrugglestocompetewithChinatheshortrun,itcouldseektojoinit–muchliketheUSdidwithJapanesecarmakersinthe1980s,ifonlytoolate.AllowingChineseinvestmentinEuropeancarassemblyshouldnotbeataboodespitethesymbolicdimensionofsuchadecisionandthelikelyoppositionofsomeEuropeancarmakers.Allelseunchanged,itwouldbefarmorebeneficialforEuropetohaveChina-brandedvehiclesonitsroadsiftheywereassembledlocallyratherthanimported.EvidencefromEuropeanelectric-battery-assemblyprojects,whereChinaisthelargestinvestor,andtheinterestexpressedbyChinesecarmakersinEuropeanautomotivefactoriesduetobeclosedshowdealswouldhavehighchancestomaterialize.•Asrawmaterialsconstituteabouthalfofbatterycosts,increasingself-sufficiencyinthisareacouldreduceEurope‘srelianceonimportedelectricpowertraincomponentsandstrengthenthedomesticvaluechain.Europeshouldalsoconsiderprioritizingthedevelopmentofminingandrefiningcapacitieswhenpossible,andestablishingtradedealswithpartnercountrieswhennot,tosecureitseconomicandstrategicinterests.Inthisrespect,theEuropeanCriticalRawMaterialAct(CRMCA)isastepintherightdirectionwhosespecificswillneedtobecommunicatedandenforcedassoonaspossible.•Lateincurrentbatterytechnologymanufacturing,EuropeshouldalsoprepareforwhatliesaheadasbothChinaandtheUSareheavilyinvestinginnext-generationbatterytechnologies.Lithium-ionchemistries,particularlyNMC(nickel,manganese,cobaltoxide)dominatethecurrentbatterymarketduetotheiradvantageousblendofenergydensity,powerandsafetyfeatures.However,therelianceonconstrainedmetalssuchascobaltnecessitatestheexplorationofalternativebatterytechnologiestomitigatesupplyrisksanddevelopdifferenttypesofbatteriesfordifferentneeds.Emergingalternatives,suchassolid-statebatteries,presentpromisingprospectsforenhancedenergydensity,safetyandsustainability.09May202319AppendixScenarioassumptionsTheassumptionsusedforthe2030scenarioareasfollows:•Acompoundannualgrowthrateof+2.5%fortheChinesepassengercarmarketby2030,bringingannualregistrationsto28.6mnunits,andalinearprogressionofthemarketsharesofChinesecarmakersto75%oftotalpassengercarregistrations.•Acompoundannualgrowthrateof+6.3%fortheEuropeanpassengercarmarketby2030,bringingannualregistrationsto15.1mnunits.HighergrowthfortheEuropeanmarketdoesnotreflectgreaterpotential,butthehistoricallowinregistrationsreachedin2022andaprogressivereturntothepeakregistrationlevelsofthe2010s.BEVpenetrationwouldstandat80%,whichisclosetotheweightedaverageofthepledgesmadebyleadingcarmakerspresentinEuropefor2030(81%).•ValueaddedpervehicleofEUR14,200.ValueaddeddatawereretrievedusingEurostat’snationalaccountsaggregatesbyindustrydatabase,usingvalueaddedfor2019ratherthan2020or2021,whichareoftenincompleteandreflectingthehighlyunusualpandemicyears,andtheNACEcodeC29,whichencompassesbothcarmakersandautomotivesuppliers.VehicleproductiondataarethoseprovidedbyOICAandcollectedfromnationaltradebodies.Vehicledefinitionmaydifferbetweencountries.DatafromtheOECD’sTradeinValueAddeddatabasealsocovertheNACEC29activitycode.Thelatestdataarefor2018.IndustrydatasourcesDataontheautomotivemarketusedinthereportcomefromthefollowingsources:•OICA(InternationalOrganizationofMotorVehicleManufacturers):timeseriesonglobalvehicleproduction.•ACEA(EuropeanAutomobileManufacturers‘Association):timeseriesonvehicleproduction,registration,import,exportetc.•KBA(Kraftfahrt-Bundesamt):timeseriesoncarregistrationsfortheGermanmarket•just-auto.com:timeseriesonEuropeanautomotivefactoryproduction(dataretrievedfromaBloombergterminal)•ChinaAutomotiveInformationNet:timeseriesonChinaautomotivesales(dataretrievedfromBloombergterminal)•ChinaAutomotiveTechnologyandResearchCenter(CATARC):timeseriesonChinaautomotiveretailsales(dataretrievedfromBloombergterminal)•ev-database.org:databaseontheBEVavailableontheEuropeanmarketAllianzResearch20ALLIANZRESEARCHteamOur09May202321ChiefEconomistAllianzSELudovicSubranludovic.subran@allianz.comAnaBoataana.boata@allianz-trade.comAndreasJobstandreas.jobst@allianz.comArneHolzhausenarne.holzhausen@allianz.comHeadofEconomicResearchAllianzTradeHeadofInsurance,Wealth&TrendResearchAllianzSEHeadofMacroeconomic&CapitalMarketsResearchAllianzSEFrançoiseHuangSeniorEconomistforAsiaPacificfrancoise.huang@allianz-trade.comManfredStamerSeniorEconomistforMiddleEast&EmergingEuropemanfred.stamer@allianz-trade.comLucaMonetaSeniorEconomistforAfrica&MiddleEastluca.moneta@allianz-trade.comMacroeconomicResearchMaximeLemerleLeadAdvisor,InsolvencyResearchmaxime.lemerle@allianz-trade.comAnoKuhanathanHeadofCorporateResearchano.kuhanathan@allianz-trade.comAurélienDuthoitSeniorSectorAdvisor,B2Caurelien.duthoit@allianz-trade.comCorporateResearchMichaelaGrimmSeniorEconomist,Demography&SocialProtectionmichaela.grimm@allianz.comKathrinStoffelEconomist,Insurance&Wealthkathrin.stoffel@allianz.comPatriciaPelayo-RomeroEconomist,Insurance&ESGpatricia.pelayo-romero@allianz.comInsurance,WealthandTrendsResearchPabloEspinosaUrielInvestmentStrategist,EmergingMarkets&AlternativeAssetspablo.espinosa-uriel@allianz.comCapitalMarketsResearchRobertaFortesSeniorEconomistforIbero-Latamroberta.fortes@allianz-trade.comMarkusZimmerSeniorEconomist,ESGmarkus.zimmer@allianz.comJordiBascoCarreraLeadInvestmentStrategistjordi.basco_carrera@allianz.comMariaLatorreSectorAdvisor,B2Bmaria.latorre@allianz-trade.comMaximeDarmetCucchiariniSeniorEconomistforUS&Francemaxime.darmet@allianz-trade.comMaddalenaMartiniSeniorEconomistforItaly&Greecemaddalena.martini@allianz.comJasminGröschlSeniorEconomistforEuropejasmin.groeschl@allianz.comAllianzResearch22RecentPublicationsDiscoverallourpublicationsonourwebsites:AllianzResearchandAllianzTradeEconomicResearch03/05/2023Noquickwins:morejobsbutlittleproductivityintheEurozone28/04/2023Policyratedecisions:theendofthebeginningorthebeginningoftheend?26/04/2023Unpackingreturnsonequity21/04/2023CommercialrealestateconcernsforUSbanks19/04/2023AllianzPensionReport202314/04/2023Europeanfoodinflation–hungryforprofits?11/04/2023InsolvencyReport:Norestfortheleveraged06/04/2023US:Creditcrunchinthemaking?05/04/2023Thegreenindustrialrevolution29/03/2023Everythingeverywhereallatonce24/03/2023Swissshotgunwedding–What’snext?23/03/2023Centrifugalemergingmarkets16/03/2023Mindthegap:theUSD30trngloballiquiditygapisheretostay10/03/2023Insidecorporateearnings08/03/2023Easycome,easygo03/03/2023#IWD:Employandpaythemmore!28/02/2023Thenewriskfrontierinfinance:biodiversityloss23/02/2023Russia´swareconomy21/02/2023The“fiveDs”ofstructurallyhigherinflation17/02/2023Thesilverliningforglobaltrade14/02/2023Rates,notroses09/02/2023MonetarypolicyinCentralandEasternEuropeaheadofthecurve?07/02/2023AFaustianbargain:Europe’sanswerstotheUSIRA02/02/2023Fallingoffasavingscliff?31/01/2023Doweneedmoreinflationtogetmorecorporateinvestment?27/01/2023Consumption:What’s(wealth)gottodowithit?24/01/2023No,theenergyshockinEuropedoesnotmeande-industrialization27/01/2023Consumption:What’s(wealth)gottodowithit?24/01/2023No,theenergyshockinEuropedoesnotmeande-industrialization20/01/2023Eurozone:quantitativetighteningandsovereigndebtservicingcost17/01/2023AllianzRiskBarometer202313/01/2023PensionreforminFrance:Bonjourtristesse10/01/2023WealthwithoutpensionsinAsia15/12/2022EconomicOutlook23-24:Keepcalmandcarryon09/12/2022Theeconomicsofwar,(anditsaftermath)08/12/2022Eurozone:Oldlessonsforanewworld01/12/2022Houseofcards?PerspectivesonEuropeanhousing09May202323ForwardlookingstatementsThestatementscontainedhereinmayincludeprospects,statementsoffutureexpectationsandotherforward-lookingstatementsthatarebasedonmanagement’scurrentviewsandassumptionsandinvolveknownandunknownrisksanduncertainties.Actualresults,performanceoreventsmaydiffermateriallyfromthoseexpressedorimpliedinsuchforward-lookingstatements.Suchdeviationsmayarisedueto,withoutlimitation,(i)changesofthegeneraleconomicconditionsandcompetitivesituation,particularlyintheAllianzGroup’scorebusinessandcoremarkets,(ii)per-formanceoffinancialmarkets(particularlymarketvolatility,liquidityandcreditevents),(iii)frequencyandseverityofinsuredlossevents,includingfromnaturalcatastrophes,andthedevelopmentoflossexpenses,(iv)mortalityandmorbiditylevelsandtrends,(v)per-sistencylevels,(vi)particularlyinthebankingbusiness,theextentofcreditdefaults,(vii)interestratelevels,(viii)curren-cyexchangeratesincludingtheEUR/USDexchangerate,(ix)changesinlawsandregulations,includingtaxregulations,(x)theimpactofacquisitions,includingrelatedintegrationissues,andreorganizationmeasures,and(xi)generalcompet-itivefactors,ineachcaseonalocal,regional,nationaland/orglobalbasis.ManyofthesefactorsNodutytoupdateThecompanyassumesnoobligationtoupdateanyinformationorforward-lookingstatementcont-ainedherein,saveforanyinformationrequiredtobedisclosedbylaw.maybemorelikelytooccur,ormorepronounced,asaresultofterroristactivitiesandtheirconsequences.AboutAllianzResearchAllianzResearchcomprisesAllianzGroupEconomicResearchandtheEconomicResearchdepartmentofAllianzTrade.AllianzGroupEconomicResearchhttps://www.allianz.com/en/economic_researchKöniginstraße2880802MunichGermanyallianz.research@allianz.comAllianzTradeEconomicResearchhttp://www.allianz-trade.com/economic-research1PlacedesSaisons92048Paris-La-DéfenseCedexFranceresearch@allianz-trade.comDirectorofPublicationLudovicSubran,ChiefEconomistAllianzSEPhone+498938007859@allianzallianz@allianz-tradeallianz-trade
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