"Since the state purchase bonuses were abolished in Germany, the business with electric cars has been slowing down. Customers are particularly put off by the high prices.
Manufacturers from China are now entering the market.
Large Chinese freighters have been heading for Germany and Europe for months. They have charged electric cars, including from the Chinese dealer BYD ("Build Your Dreams"), which is turning the market upside down in the People's Republic with aggressive discounts. The gigantic ships make an impression, but the Chinese are only at the beginning of their expansion. Just under 34,000 models from China were newly registered in Germany in 2023. But this number is likely to rise.
One thing is certain: Due to the economic situation, many car buyers are tight on their belts. And the German manufacturers have little to offer for those on a budget. At the beginning of the year, the ADAC put together a list of the 30 cheapest electric cars. The costs for purchase and operation were taken into account - but no discounts. The first German representative was the Opel Astra Electric in 9th place: basic purchase price without discounts 41,990 euros. If you include the foreign VW subsidiaries Cupra (Seat) and Skoda, only 8 out of 30 cars came from German companies. Chinese cars were not yet included in the ADAC evaluation.
Chinese carmakers were overconfident
“German car manufacturers don’t have to worry too much in their home market,” believes Philipp Kupferschmidt, who is responsible for the automotive industry in German-speaking countries at the management consultancy Accenture. Because Chinese cars aren't really that cheap. “The big disadvantage of the Chinese car manufacturers is that they entered the market very self-confidently with high prices. They made a massive miscalculation,” says the industry expert. "That's why there are now significant price discounts at BYD." BYD, for example, has the Dolphin in its range as a competitor to the VW ID.3 and the Atto model as a counterpart to the VW ID.4.
Given the difficult situation on the electric car market, German providers have been given a breather to catch up on development backlogs with regard to e-mobility and software as well as infotainment, says Kupferschmidt. In addition to the abolition of state bonuses, the significant price reductions by the electric car top dog Tesla also caused uncertainty in the market. Many buyers ask themselves: How much will my expensive electric car be worth in a few years?
Affordability as an important factor
Other experts still see the Germans as having an open flank. “For many customers it is important that you can buy a car for 15,000 to 20,000 euros,” says industry expert Frank Schwope, who teaches automotive economics at the Fachhochschule des Mittelstands in Cologne and Hanover. "The affordable electric car from China is something like the great hope of German citizens." There are cars planned by VW, for example, that will cost 25,000 or at some point 20,000 euros. “But whether they will ever break these marks given inflation is questionable,” Schwope doubts.
The International Energy Agency (IEA) also sees affordability as a factor in the spread of electric cars. Growing exports from Chinese manufacturers, which accounted for more than half of all sales worldwide in 2023, could further increase pressure on car prices, the IEA said in Paris on Tuesday. Chinese companies with production facilities abroad have seen strong sales in overseas markets with more affordable models released in 2022 and 2023.
Electric cars are cheaper than the cars with combustion engines
According to the IEA, over 60 percent of electric cars sold in China in 2023 were cheaper to purchase than a corresponding combustion engine model. In Europe and the USA, however, the purchase prices for cars with combustion engines remained cheaper on average. However, increasing competition and better battery technologies are likely to lower prices in the coming years.
In Schwope's opinion, it could make sense to offer compact vehicles at "reasonable prices". "Especially since the Chinese manufacturers will attack here and their software and battery technology are mature." Not only start-ups but also mass manufacturers are making the leap.
The Chinese want to expand production in Europe
The largest Chinese car exporter Chery wants to offer electric and combustion SUVs in the mid-range segment this year through established dealers. Nevertheless, whether electric cars will become much more affordable is another matter. Among other things, the overall demand for cheap cars could be too low to allow mass production due to charging problems, so expert Kupferschmidt from Accenture is skeptical about economies of scale at affordable prices.
"The Chinese are unlikely to be the saviors of small wallets in Western Europe in the next few years; they don't want to be cheap residents," says Kupferschmidt. Freight costs, marketing and tariffs would erode much of the advantage of lower manufacturing costs anyway. “That could change somewhat with their own production in Europe,” says Kupferschmidt.
Chery recently announced that it would set up its own production in Spain. To do this, the Chinese are moving into a former Nissan factory in Barcelona with a joint venture. BYD meanwhile wants to produce in its own factory in Hungary.
“Not every Chinese brand will survive in Europe, but five to ten are likely to survive,” says Schwope. "In the medium to long term, they could grab 10 to 15 percent of the market share."
There is great confidence in China that you can survive in Germany with your own electric cars. Not just because of the price. "I believe that Chinese cars definitely have a chance of being successful on the German market," says Cui Dongshu, secretary general of the Chinese Automobile Association CPCA. After all, models from other countries have been widespread in Germany for a long time.
German car buyers also hardly have to get used to Chinese vehicles. After all, China learned the “automotive basics” from Germany. Product and design concepts are related. In addition, there are China's advantages when it comes to innovation." [1]
1. China als Hoffnung auf günstige E-Autos. Frankfurter Allgemeine Zeitung (online) Frankfurter Allgemeine Zeitung GmbH. Apr 23, 2024
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