A general view of visitors looking at models from BYD, a Chinese automaker, at an event a day before the official opening of the Munich Auto Show 2023 IAA Mobility, in Munich, Germany, on 4 September 2023. REUTERS/Leonhard Simon
MUNICH – European carmakers have a fight to produce electric vehicles (EVs) at lower cost and erase China’s lead in developing cheaper and more user-friendly models, their leaders said at the show. Munich IAA mobility.
“We need to close the cost gap with some Chinese players who entered the electric vehicle business a generation earlier,” Renault CEO Luca de Meo told Reuters at the motor show, adding that when manufacturing costs would drop, prices would also drop.
De Meo said as part of the French automaker’s push toward price parity with the Chinese, its R5 EV due for release next year will be 25 to 30 percent cheaper than its electric Scenic and Megane models.
Chinese EV makers including BYD, Nio and Xpeng are all targeting the European EV market, where sales soared nearly 55% to around 820,000 vehicles in the first seven months of 2023, or around 13% of all car sales.
Xpeng plans to expand into more European markets in 2024, and Zhejiang Leapmotor Technology announced five models for overseas markets, including Europe, over the next two years.
According to automotive consultancy Inovev, 8% of new electric vehicles sold in Europe this year were made by Chinese brands, compared to 6% last year and 4% in 2021.
Around 41% of exhibitors at this year’s Munich event are headquartered in Asia, with double the number of Chinese companies attending, including BYD, Xpeng and battery maker CATL.
The arrival of Chinese electric vehicle makers in Europe has raised concerns that they could dominate electric vehicle sales.
“We (Germany) are losing our competitiveness,” said Hildegard Mueller, president of the German Automotive Industry Association (VDA), adding that the Munich motor show illustrated “how the strong pressure of international competition” makes it essential for Germany to invest. more into electrification.
The average electric vehicle in China cost less than 32,000 euros ($35,000) in the first half of 2022, compared to around 56,000 euros in Europe, according to Jato Dynamics researchers.
“The core car market segment will either disappear or not be tapped by European manufacturers,” BMW CEO Oliver Zipse said Sunday evening, referring to China’s push into Europe.
Mercedes-Benz will showcase its CLA compact class and BMW its Neue Klasse, both aiming for greater range and efficiency while halving production costs.
Volkswagen CEO Oliver Blume told reporters that through its partnerships in China, the automaker aims to cut battery cell costs by 50 percent.
Xpeng Chairman Brian Gu said that while European automakers are currently lagging behind China, they have made a “huge commitment” to electric vehicles with significant partnerships and investments in technology.
“I would never rule out the big[automakers]who are really trying to come back and focus on this important transition,” Gu said.
Auto industry analyst Ferdinand Dudenhoeffer said the Chinese are “world champions” in making batteries, which can account for 40% of the cost of an electric vehicle.
Chinese battery makers locating in Germany are helping drive down the costs of electric vehicles, and German politicians need to make sure they “are not driven out of the country with stupid decoupling strategies,” Dudenhoeffer added.
($1=0.9273 euros)
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