Newly produced electric vehicles are on display at the Tesla Shanghai Gigafactory on December 31, 2023 in Shanghai, China.
Cost Photo | Noor Photo | Getty Images
BEIJING – New tariffs on Chinese electric vehicles will not be enough to help foreign automakers remain competitive, especially in the lucrative Chinese market, consultancy AlixPartners said.
China is the world’s largest automobile market. China is a global leader in the development of new energy vehicles, including pure battery vehicles and hybrid vehicles.
Currently, new energy vehicles account for more than 40% of new passenger car sales in China, and most domestic automakers lead sales while foreign companies lag behind.
Stephen Dyer, co-head and head of AlixPartners’ Asia automotive business, said at Wednesday’s annual industry outlook event that many foreign car companies still haven’t figured out how their products will differentiate themselves in China’s electric vehicle market.
“Unless (foreign car brands) change their thinking about developing and manufacturing cars to one that is more willing to take risks and consider how to design and build cars from so-called first principles, their position will become increasingly precarious. He was referring to the concept of solving problems based on their fundamentals.
german luxury brand Porsche said last Tuesday that sales in China plunged by a third first half of this year. The company attributed this to consumers’ “focus on value-oriented sales.”
Chinese car manufacturers from Nioh arrive BYD The cars have already begun being exported to Europe and other overseas markets, prompting the United States to increase auto tariffs from 25% to 100%.
European Union It was also announced in June that it would impose tariffs of up to 38% on Chinese electric vehicle imports to deal with the “threat of economic harm” faced by European electric vehicle manufacturers. In response, China said it was negotiating with the European Commission to “reach a mutually acceptable solution” before the tariffs are implemented in November.
Dell said that even if the EU imposes tariffs, Chinese cars will still earn 20% profit margins, noting that the profit margins will be the same as those on sales in the Chinese market. He added that this is because the wave of tariffs may accelerate the implementation of local production strategies by Chinese electric vehicle manufacturers in Europe, thus reducing transportation costs.
BYD is opening a factory in Hungary. Last week, the company announced $1 billion deal struck with Türkiyeand opened a factory in Thailand.
According to AlixPartners, the production cost of electric vehicles made in China is currently 35% lower than similar vehicles from foreign automakers.
local partner
China has been a key market for many of the world’s largest automakers, which are trying different strategies to maintain domestic sales.
Some Foreign companies are trying to enter the Chinese market by partnering with local brands. Dell Quote Volkswagen and Xpeng MotorsThe German automaker signed a partnership to launch an SUV earlier this year and spent $700 million to acquire nearly 5% of Xpeng Motors last year.
Other brands are also trying to cut prices.
Earlier this month, German carmaker BMW New Mini-Cooper EV launched in China Through a joint venture with Great Wall Motors (GWM).
According to Chinese prices, the car’s retail price starts at $26,140, which is nearly 5 percent cheaper than the approximately $27,520 price of the gas-powered Mini Cooper 3-door.
By comparison, the cheapest electric car sold by BYD, the Seagull, is priced much lower at $9,700.
BMW launched its first electric Mini Cooper in 2019, and deliveries began in China and Europe the following year.
Dell said that while it is “rational” to cooperate to gain market share, it will be difficult for foreign automakers to stay in the Chinese market for the long term if they do not change the status quo.
Last month, a Bank of America analyst said Detroit-based U.S. automakers should exit China “as soon as possible” because they are at a disadvantage competing against Chinese electric vehicle giants.
Research by AlixPartners shows that Chinese new energy vehicle manufacturers have also shortened the development time of new models to 20 months, which is half of the 40 months required by traditional Chinese car brands.
Chinese new energy vehicle brands are also launching new models much faster than non-Chinese brands, the research firm said, noting that the cars’ technology and battery specifications are about two to three years ahead of foreign companies’ plans.
Electric vehicles are simpler than those powered by internal combustion engines. A major challenge facing the industry is convincing consumers to buy battery-powered cars, primarily by reducing range anxiety.
The Chinese government has ordered the construction of battery charging stations across the country, and startup Nio has launched battery-swapping stations it claims can fully charge drivers in just minutes.
Another issue foreign automakers face is competition with local labor, as Chinese workers prefer to work long hours.
Dell said that Chinese electric vehicle employees work up to 140 hours of overtime per month, far exceeding the 20 hours of overtime at traditional global automobile companies, and pointed out the “hard-working spirit” of the Chinese people.
Driven by this push, AlixPartners predicts that by 2030, Chinese brands will account for more than 70% of China’s new energy vehicle market and account for one-third of the global automotive market, or 9 million vehicles per year.
Correction: This story has been updated to reflect that Dell was referring to “first principles.” A previous version of this story contained a misstatement.
About The Author
