Chinese electric vehicle makers are not a threat with prices abroad soaring

According to Volkswagen CEO Oliver Blum, European manufacturers have an advantage over Chinese electric vehicle makers. The Volkswagen leader said the Chinese are offering their cars at “twice the price they pay in China” than they pay in Europe.

The CEO says Volkswagen is not threatened by Chinese electric car makers

Although Blum admitted that “the Chinese have learned how to build cars over the past few decades” at the IAA Mobility show in Munich, he thinks VW still has the edge.

“We have the know-how of the vehicle, we have the quality level. We have the brand legacy. The newcomers don’t have that. So we see ourselves in a good position,” Blum said, according to what was quoted by the German newspaper. Car Week.

Although the share of electric cars shipped to Germany from China more than tripled (28.2% versus 7.8% last year) in the first quarter of the year, Blum keeps his word.

The Volkswagen Group and Porsche CEO said that Chinese electric car makers can manufacture cars at a cost of about 20 percent less in China. “They will not be able to offer in Europe the level of costs that they offer in China,” he said.

Given the high costs associated with adapting vehicles to European requirements and setting up a sales network, “we can see in the market that the Chinese are offering us their cars at twice the price they pay in China.”

SAIC-VW ID.3 Electric Vehicle in China (Source: SAIC-VW)

The competition is still fierce

And Blum acknowledged that new competition continues to aggravate the auto industry. “Competition is always a good thing. It forces us to be better.”

Volkswagen will need to position itself better to stay competitive. “We’re going to have to work really hard on the cost,” Blum explained.

One of the biggest areas of focus is the battery, which is the primary cost of an electric vehicle. With its new unified cell, Volkswagen aims to reduce costs by 50%, enabling cheaper electric vehicles.

An affordable Volkswagen EV
Volkswagen ID 2all electric concept car (Source: Volkswagen)

In March, Volkswagen teased its affordable ID 2all electric concept car, which starts at under $27,000 (€25,000) with a range of 279 miles (450 km).

Blume also sees the presence of ICE vehicles in its lineup as a transition to electric vehicles as an advantage over all electric vehicle brands such as NIO and BYD. ICE sales are expected to fund VW’s transition, while all-electric car brands need to find alternative funding sources.

NIO-ET5 - for the tour
NIO ET5T designed for Europe (Source: NIO)

Take Electric

Blume’s comments are interesting, given that Volkswagen outsources the technology to China. Volkswagen revealed a $700 million investment in Chinese electric car maker XPeng for a stake of about 5% in July.

Moreover, Audi and Chinese state-owned automaker SAIC Motor are collaborating to develop new electric models in the region. Outside of China, Volkswagen placed an extensive order with Hyundai Mobis, a supplier to Hyundai, for battery system assemblies.

Blum talks about the European market, but these are bold comments for a company that is already outsourcing technology to the region.

Several new Chinese electric vehicle brands are expanding their presence in Europe, including BYD, NIO, and XPeng, to name a few.

Volkswagen - Chinese - makers of electric cars
Michael Shaw, Managing Director of BYD Europe, introduces Seal and Seal U (Source: BYD)

BYD brought several electric vehicles to the IAA Mobility Show in Munich, including Han, SEAL, Dolphin and the upcoming SEAL U (D-segment SUV), which will arrive in the first half of next year. It will start at 42,990 euros ($46,100) in Germany.

Meanwhile, Volkswagen’s ID.5 is priced at €47,595 ($51,050), while the new flagship ID.7 will be priced in the €50,000 ($53,600) range.

BYD sold 2,492 vehicles in Europe through July, compared to 1,170 vehicles last year. Atto 3 accounts for 1,977 of those, according to information from Dataforce (via Automotive News Europe).

Michael Shaw, Managing Director of BYD Europe, said:

We have made great progress entering new markets in Europe. Just twelve months ago, we introduced our brand to Europe and in less than a year, we have established a brand presence in 15 European countries and opened more than 140 stores. We work together with the best dealer partners to create a network that delivers outstanding customer services and retail experiences.

We’ll see how the story develops over the next few months.

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