Decision makers and industrialists are facing complications that hinder projects to produce fully European-made electric cars at affordable prices, which may benefit Chinese companies that adopt bold strategies to overthrow the traditionally dominant brands in this market.
And unlike textiles or smartphones, the European car industry still manages to escape competition from cheap Chinese products.
Announcement
But observers agree that this will not continue, as a group of brands are working on preparing models for the European market, as evidenced by the strong presence of China at the Munich Motor Show that takes place this week.
These new entrants combine technological advances, thanks to China’s investment in the electric vehicle industry over the past 10 years, with low labor costs.
European governments are urging manufacturers on the continent to make electric vehicle mobility more accessible, with a view to banning new thermal or hybrid vehicles in 2035.
This message is expected to be echoed by German Chancellor Olaf Scholz, who officially inaugurates the Munich exhibition on Tuesday.
An electric car for 20,000 euros?
In China, electric cars are sold at prices “up to 60% lower than those in Germany”, notes auto industry expert Ferdinand Dudenhofer.
At the end of July, the general manager of the French company Stellantis, Carlos Tavares, spoke of an “invasion” by manufacturers that incur “25% less cost”.
The best-selling Chinese brand in the old continent, MG, offers vehicles that sell for around 30,000 euros, excluding environmental incentives, depending on the models in the primary categories.
MG was founded in Britain in 1924, but it was relaunched after its bankruptcy in 2005 from the giant Chinese car company SAIC, and MG benefits from its “fame as an old Western brand as well as the competitiveness of the Chinese market,” says Felipe. Muñoz, from Gato Dynamics.
In the first half of this year, Chinese brands accounted for 8 percent of the electric vehicle market in Western Europe, while their shares were close to zero in 2019, according to analyst Matthias Schmidt’s calculations.
It is expected that BYD, the leading Chinese manufacturer of electric cars, will start flooding the European market with its products from the second half of 2023, according to Schmidt. The Atto 3 topped the electric car sales in July in Sweden, accounting for more than a quarter of all electric cars registered in the country.
In turn, European manufacturers are doing their best to reduce production costs and offer cheaper models.
Announcement
Even Mercedes, which has refocused its strategy on luxury, promised on Sunday a model aimed at making electric cars “available” to wider groups, according to what First Kallenius said, without elaborating.
In March, the German brand Volkswagen presented the future ID.2 at a price of less than 25 thousand euros, which is expected to be launched in 2025. It also plans to develop a model under 20 thousand euros, a price that only a few companies have reached. Manufacturer of electric cars.
Stellantis is focusing mainly on the Citroën C3 electric car, which will be unveiled in mid-October. Renault will launch an R5 city car, at a price of less than 30,000 euros. The group’s Opel brand also plans to present a model “at a price of around 25,000 euros” shortly after 2025, its president Florian Huettel announced Monday.
Increase the quantity to lower the price
“The more electric models we have, the more we benefit from economies of scale,” said Volkswagen chief Oliver Blume on Sunday evening in Munich, counting on increasing quantities to lower prices.
Until then, against the backdrop of the economic slowdown, the market share of electric cars, which are still very expensive, is expected to decline by 12% in September, according to Dudenhofer.
Announcement
In France, the government promised to provide an offer to rent electric cars at “reasonable prices”, and President Emmanuel Macron spoke of an amount of 100 euros per month for this rental, provided that resource conditions are available.
France is also considering making subsidies for electric cars conditional on an “eco-label”, which is likely to limit Chinese imports.
In Germany, the country of Volkswagen, BMW and Mercedes, purchase bonuses are not considered a sustainable solution. To get manufacturers to market more affordable electric cars, the government cut the environmental bonus this year and plans to phase it out by 2025.
This situation could affect the comfortable margins achieved by European groups by taking advantage of inflation to raise prices.
Additional sources • ap
2023-09-05 21:33:47
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