International Energy Agency: Chinese imports could push down e-car prices

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Electric cars from Chinese manufacturers are still rare in Germany. They only reached just under 34,000 new registrations in 2023. But their number is likely to rise. Soon, there will be significantly more of them, including from the Chinese high-flyer BYD, which is currently turning the market upside down in the People's Republic with aggressive discounts.

The German manufacturers currently have no offer for small budgets, and for medium-sized ones it is very manageable: at the beginning of the year, the ADAC compiled a list of the 30 cheapest electric cars. The costs for purchase and operation were considered – without discounts. The first German representative was the Opel Astra Electric (test, german) at rank 9 for 41,990 euros. If the foreign Volkswagen brands Cupra (Seat) and Skoda are included, only 8 out of 30 cars came from German groups. Chinese cars were not yet included in the ADAC evaluation. The Opel Corsa Electric, which is currently available as a special model #Yes from 29,990 euros, is also not included in this list of total costs.

"The Chinese have misjudged"

"German car manufacturers don't need 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. After all, Chinese cars are not really cheap. "The big disadvantage of Chinese car manufacturers is that they entered the market very confidently with high prices. They massively overestimated themselves," says the industry expert. "That's why BYD is now also offering considerable discounts." For example, BYD has the Dolphin in its range to compete with the VW ID.3 (test, german) and the Atto model to counter the VW ID.4.

Considering the difficult situation on the electric car market, German suppliers have been given a breather to catch up on development backlogs with regard to e-mobility, software and infotainment, says Kupferschmidt. In addition to the discontinuation of state subsidies, the significant price cuts by the electric car top dog Tesla have also caused uncertainty in the market. Many buyers are asking themselves: how much will my expensive electric car be worth in a few years' time?

"Car from China the hope of the German citizen"

Other experts nevertheless see an open flank among Germans. "For many customers, it's important that you can buy a car for 15,000 to 20,000 euros," says Frank Schwope, who teaches automotive economics at the University of Applied Sciences and Arts for SMEs in Cologne and Hanover. "The affordable electric car from China is something like the great hope of the German citizen." There are plans for cars from VW, for example, that will cost 25,000 or even 20,000  euros at some point. "But it's questionable whether they will ever crack these marks in view of inflation."

The International Energy Agency (IEA) also sees affordability as a factor in the spread of electric cars. Growing exports from Chinese manufacturers, which will account for more than half of all sales worldwide in 2023, could put further pressure on car prices, the IEA announced today in Paris. Chinese companies with production facilities abroad have achieved strong sales in overseas markets, with more affordable models launched in 2022 and 2023.

Electric cars are already cheaper in China

According to IEA figures, over 60 percent of electric cars sold in China in 2023 were cheaper to buy than an equivalent model with a combustion engine. In Europe and the USA, on the other hand, purchase prices for cars with combustion engines remained cheaper on average. However, increasing competition and better battery technologies are likely to bring prices down in the coming years. In Schwope's opinion, it could make sense to offer compact vehicles at "reasonable prices". "Especially as Chinese manufacturers will attack here and their software and battery technology is mature." Not only start-ups, but also mass manufacturers are ready to make the leap.

Chery, China's largest car exporter, plans to offer electrically and conventionally powered mid-range SUVs via established dealerships this year. However, whether electric cars will become much more affordable is another matter. Among other things, the demand for affordable cars could be too low overall in view of charging problems to achieve low prices with mass production through economies of scale, Accenture employee Philipp Kupferschmidt points out.

Cost-cutting production in Europe

"The Chinese will not be the savior for the small purse in Western Europe in the foreseeable future, they don't want to be cheap," says Kupferschmidt. Freight costs, marketing and customs duties would eat up much of the advantage of lower production costs anyway. "But that could change somewhat with our own production in [Europe]." Chery recently announced the establishment of its own production facility in Spain. To this end, the Chinese are moving into a former Nissan plant in Barcelona with a joint venture. BYD, meanwhile, wants to produce in its own factory in Hungary. Having its own plants would underline that the company is serious. "Not every Chinese brand will survive in Europe, but five to ten are likely to remain," says Schwope. "In the medium to long term, they could take 10 to 15  percent of the market share."

Optimism among Chinese manufacturers

There is great confidence in China that its own electric cars can hold their own in Germany. 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 widely available in Germany for a long time. Moreover, German car buyers hardly have to get used to Chinese vehicles. After all, China has learned the "automotive basics" from Germany. Product and design concepts are related. In addition, China has advantages when it comes to innovation.

(dahe)