International Energy Agency: China’s electric cars as a price brake for Europe

Electric cars from Chinese manufacturers are still rare in Germany. In 2023 they only got around 34,000 new registrations. But their number can increase. Soon there will be more of them, including from the Chinese seller BYD, which is currently turning the market in the People’s Republic with strong discounts.

German manufacturers currently have no offer for small budgets, but for medium-sized it can be very manageable: At the beginning of the year, ADAC put together a list of 30 affordable electric cars. Purchase and operating costs were taken into account – without discount. The first German representative was the Opel Astra Electric (test) in 9th place for 41,990 euros. If you include foreign brands Volkswagen Cupra (Kiti) and Skoda, only 8 out of 30 cars came from German companies. Chinese cars are 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 been wrongly judged”

“German carmakers should not be too worried about their home market,” believes Philipp Kupferschmidt, who is responsible for the German-speaking automotive industry at Accenture management. Because Chinese cars are not very cheap. “The biggest disadvantage of Chinese car manufacturers is that they entered the market with too much confidence and high prices. They made a big mistake,” says an industry expert. “That’s why there is now a big discount at BYD.” BYD, for example, has the Dolphin in its lineup as a competitor to the VW ID.3 (experimental), and the Atto model as a partner to the VW ID.4.

Due to the difficult situation in the market for electric vehicles, German service providers have been given a break to catch up behind the developments regarding e-mobility and software as well as infotainment, says Kupferschmidt. In addition to the end of government subsidies, major price cuts by the top dog of the electric car Tesla also caused uncertainty in the market. Many buyers wonder: What will my expensive electric car be worth in a few years?

“A car from China is the hope of German citizens”

Some experts still consider the Germans to be open-minded. “For many customers it is important that you can buy a car for 15,000 to 20,000 euros,” says Frank Schwope, who teaches automotive economics at a medium-sized business college in Cologne and Hanover. “A cheap electric car from China is something like the great hope of German citizens.” There are cars planned by VW, for example, which will cost 25,000 or at some point 20,000 euros. “But whether they will ever break these marks due to inflation is doubtful.”

The International Energy Agency (IEA) also sees affordability as a reason for the spread of electric vehicles. Growing exports from Chinese manufacturers, which accounted for more than half of global sales in 2023, could put further pressure on car prices, the IEA said in Paris today. Chinese companies with overseas production facilities have seen strong sales in overseas markets, with cheaper models being launched in 2022 and 2023.

Electric cars are already cheap in China

According to the IEA, more than 60 percent of electric vehicles sold in China in 2023 were cheaper to buy than the equivalent model with a combustion engine. In Europe and the United States, however, purchase prices for cars with combustion engines remained affordable on average. However, increased competition and better battery technologies are likely to drive down prices in the coming years. In Schwope’s view, it could make sense to offer small cars at a “good price”. “Especially since the Chinese manufacturers will attack here with their software technology and batteries are mature.” Not only the beginners but also the mass producers are making a big scale.

China’s leading car exporter Chery wants to offer electric and conventional mid-range SUVs this year through specialist dealers. However, whether electric cars will become more affordable is another matter. Among other things, due to charging problems, the overall demand for cheap cars may be too low to achieve lower prices through mass production through economies of scale, points out Accenture employee Philipp Kupferschmidt.

Cost-cutting production in Europe

“The Chinese are not likely to be the saviors of small wallets in Western Europe in the next few years; they do not want to be cheap residents,” says Kupferschmidt. The cost of transportation, marketing and taxes would eliminate most of the benefits of lower manufacturing costs. “But that could change with our own production in Europe.” Chery recently announced that it will start its production in Spain. To do this, the Chinese are moving into the old Nissan factory in Barcelona with a joint venture. BYD meanwhile wants to produce in its factory in Hungary. Your own works would emphasize that you are serious. “Not every Chinese brand will survive in Europe, but five to ten are likely to survive,” says Schwope. “In the medium and long term, they can grab 10 to 15 percent of the market share.”

Optimism among Chinese manufacturers

There is a strong belief in China that you can live in Germany with your own electric cars. Not just because of the price. “I believe that Chinese cars definitely have a chance to succeed in the German market,” says Cui Dongshu, secretary general of the China Automobile Association CPCA. After all, examples from other countries have spread in Germany for a long time. German car buyers also don’t have to get used to Chinese cars. After all, China learned the “basics of cars” from Germany. The concepts of product and design are related. Added to this are China’s advantages when it comes to innovation.

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