Asian automotive OEMs are likely to benefit from the challenging energy crisis European manufacturers are facing, Schmidt Automotive Research said in a new report Friday.

The forecast comes as nearly 10 new Chinese BEV models are set to enter the market in the remainder of the year, adding to a market share of over 5% in the Western European BEV market on a 12-month rolling basis. Chinese brands such as BYD, NIO, FAW, and Xpeng are actively increasing their European presence, first established in Norway.

While competition is increasing in Europe, local carmakers struggle with rocketing energy prices, threatening both components and vehicles production and sales. Despite the temporary measures put in places by governments across the EU and UK, European automakers remain fearful of their global competitiveness, Kallanish notes.

“Less exposed to energy price spikes in their domestic markets, Japanese, Chinese, and Korean – and maybe even Vietnamese – [producers] could capitalise with competitive production costs,” Schmidt says. “Assuming there is still demand in the region … a potential window appears to be opening.”

Thanks to free trade agreements, Japanese and South Korean companies can export their electric vehicles to the EU with zero import tariffs, putting them at a higher advantage. Chinese models still see a 10% tariff applied to passenger cars entering the bloc, but their lower production costs and increasingly lower energy prices compared to European production facilities are also advantageous.

“With industry fuel rationing one possibility or voluntary production shutdowns another – if further operation makes no business sense – the European business model may be heading for a brutal crash landing,” Schmidt warns. “European plants are currently rushing to produce as many components [as possible] for other global plants now, to boost parts inventory before potential difficulties arise.”

Yet, the report also shows that European brands Volkswagen and Stellantis continue to dominate West Europe’s BEV market with a combined share of just under 40%. Tesla, which Schmidt suggests is “burning money” at its Giga Berlin, has the UK as its biggest market in Western Europe so far this year. However, Germany is set to overtake UK’s Tesla deliveries by the end of 2022 as German drivers are expected to accelerate their shift to ensure a purchase before next year’s cut in government subsidies.