According to Volkswagen CEO Oliver Blume, European carmakers enjoy an edge over their Chinese electric vehicle (EV) rivals. According to Volkswagen’s CEO, China-based subsidiaries sell vehicles to European markets at prices roughly double what they would be if sold domestically in China.
As Volkswagen CEO says, German automaker shouldn’t feel threatened by rapid rise of Chinese electric vehicle manufacturers.
Although Blume acknowledged that the Chinese language has developed methods to build cars over the past few years at the IAA Mobility event in Munich, he still believes Volkswagen holds an advantage.
“We possess the expertise to create cars and own the capacity for exceptional quality.” We’ve established a lasting legacy in our field. The newcomers don’t have that. We perceive ourselves to be well-positioned,” Blume concurred, a sentiment echoed by the prominent German newspaper.
Despite the share of EVs shipped to Germany from China more than tripling (28.2% versus The company’s revenue has surged 77% in the first quarter of the year, with Blume reaffirming his earlier prediction.
According to the VW Group and Porsche’s CEO, Chinese electric vehicle manufacturers are able to produce cars at a cost that is approximately 20% lower than the global average in China. Despite this, they will not be able to offer the same level of pricing as they do in China in Europe.
As a direct consequence of high costs linked to modifying cars for European markets and building a nationwide distribution network, it’s anticipated that the Chinese will sell their vehicles to us at more than double the price they pay domestically.
Competition continues to intensify.
Blume acknowledged that newly emerging competitors were significantly increasing the intensity in the automotive industry. Competition is always a significant factor. This transformation compels us to evolve further.
To maintain its competitive edge, Volkswagen may need to reposition itself in the market. “We need to focus intently on the fee component,” Blume explained.
The battery, a crucial component in electric vehicles (EVs), is indeed one of the primary focal points, with its performance directly impacting overall vehicle value. Volkswagen aims to cut prices by half through its newly launched unified cell technology, making electric vehicles more affordable.
Volkswagen unveiled a teaser for its budget-friendly ID 2all electric vehicle concept in March, boasting an affordable price tag of under $27,000 (€25,000) and an impressive range of up to 279 miles (450 km).
Blume views the incorporation of ICE vehicles into its product portfolio as a strategic advantage in its transition to electrification, distinguishing it from all-electric manufacturers like NIO and BYD. The CEO anticipates that ICE’s (Internal Combustion Engine) revenue will be relied upon to underpin VW’s transformation into an electric-vehicle dominant manufacturer; conversely, pure-play EV companies seek alternative financing options.
Electrek’s Take
The feedback from Blume on Volkswagen’s decision to outsource its Chinese operations’ expertise is indeed intriguing. Volkswagen announced a significant investment of $700 million in XPeng, a leading Chinese electric vehicle manufacturer, securing nearly a 5% stake in the company back in July.
Audi is partnering with China’s state-owned SAIC Motor to create a range of innovative electric vehicles in the region. Volkswagen has placed a substantial order with Hyundai Mobis, a leading supplier to the Korean automaker, for the provision of battery technology assemblies on the exterior of China.
Blume is discussing the European market, but his candid assessment of its challenges poses significant concerns for companies that have already committed to outsourcing tech operations there.
Chinese electric vehicle (EV) makers are expanding their footprint in Europe, with notable entrants including BYD, NIO, and XPeng, among others.
At the IAA Mobility event in Munich, BYD showcased a range of electric vehicles, including the Han, SEAL, DOLPHIN, and forthcoming SEAL U, a D-segment SUV, with market availability expected during the first half of next year. The all-new electric SUV will debut at €42,990 (approximately $46,100 USD) when it hits the market in Germany.
Meanwhile, Volkswagen’s ID.5 carries a price tag of €47,595 ($51,050), while its newly launched flagship ID.7 is expected to fall within the mid-€50,000 range, approximately $53,600.
Chinese electric vehicle manufacturer BYD sold 2,492 cars in Europe through July, a significant increase from the 1,170 units it moved during the same period last year. According to Dataforce, the Atto 3 accounted for 1,977 of these, as recorded.
As Michael Shu, managing director of BYD Europe, noted:
Significant strides have been taken to successfully enter new European markets. Just twelve months ago, we successfully launched our brand to Europe, subsequently establishing a significant presence across 15 countries within the region and opening more than 140 stores within that timeframe. We partner with top suppliers to build a community that offers exceptional customer service and seamless retail experiences.
We’ll monitor the story’s performance over the next few months to gauge its overall success.
