Cheaper electric cars from China are hitting the market

One thing is certain: Because of the economic climate, many car buyers are wearing their seat belts. And German manufacturers have little to offer for those on a budget. At the beginning of the year, ADAC put together a list of the 30 cheapest electric cars. Purchase and operating costs were taken into account – but no discount. The first German representative was the Opel Astra Electric in 9th place: basic purchase price without discount 41,990 euros. If you include the foreign subsidiaries of VW Cupra (Kiti) and Skoda, only 8 out of 30 cars came from German companies. Chinese cars are not yet included in the ADAC evaluation.

Chinese automakers were overconfident

“German car manufacturers should not be too worried about their home market,” believes Philipp Kupferschmidt, who is responsible for the automotive sector in German-speaking countries at the management organization Accenture. 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 price cut for BYD, for example, it has the Dolphin in its range as a competitor to the VW ID.3 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?

Affordability as an important factor

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 industry expert Frank Schwope, who teaches automotive economics at the Fachhochschule des Mittelstands in Cologne and Hanover. “A cheap electric car from China is something like the great hope of German citizens, for example, cars from VW are planned that will cost 25,000 or at some point 20,000 euros. “But if they ever break these marks due to inflation it puts doubt,” Schwope doubts.

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 all global sales in 2023, could add further pressure to car prices, the IEA said in Paris on Tuesday. Chinese companies with overseas production facilities have seen strong sales in overseas markets with affordable models released in 2022 and 2023.

Electric cars are cheaper than combustion engines

According to the IEA, more than 60 percent of electric vehicles sold in China in 2023 were cheaper to buy than the equivalent combustion engine model. 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 Chinese manufacturers will attack here and the software and battery technology is mature.”

The Chinese want to expand production in Europe

China’s leading car exporter Chery wants to offer electric and combustion SUVs in the mid-range segment 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 low prices through mass production through economies of scale, says expert Accenture Kupferschmidt, skeptically.

“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. “That may change to some extent with our own production in Europe,” says Kupferschmidt. 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.”

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. In addition, China has an advantage when it comes to innovation.