Competing with Chinese electric vehicles in China is just not a straightforward task. Just ask the CEO of Volkswagen.
The automotive manufacturer “cannot currently compete at the top of the table” within the Chinese EV sector, said VW boss Oliver Blume told Germany Frankfurter Allgemeine Zeitung in a Friday interview, as discovered by Reuters.
VW has long been China’s best-selling automotive brand, but last 12 months it happened was overtaken from Chinese rival BYD, which sells each electric vehicles and plug-in hybrids now not produced traditional cars. BYD, backed by Warren Buffett’s Berkshire Hathaway, beat Tesla in global electric vehicle sales for the primary time within the fourth quarter of last 12 months, although Elon Musk’s carmaker reclaimed the crown in the primary three months of this 12 months.
As sales of traditional vehicles decline in China, automakers focusing more on electric vehicles have gained market share on the expense of legacy automakers. VW still sells traditional vehicles in China with its local partners, along with a comparatively small number of electrical vehicles in comparison with BYD.
Intense competition in China’s electric vehicle space has far-reaching implications each inside and outdoors the country. Last month, Bloomberg reported that Tesla plans to scale back production at its Shanghai factory because the automaker faces increasing competition from Chinese rivals offering cheaper electric vehicles with all types of features.
Chinese electric vehicle manufacturers “extremely good”
All over the world, long-established automakers are surprised by the costs at which Chinese electric vehicle makers – that are rapidly increasing their exports – can offer their vehicles. In the US, trade associations and lawmakers are warning of a possible market entry by Chinese electric vehicle manufacturers through Mexico and are calling for already strict protectionist measures to be tightened. In the EU, the European Commission is examining whether Chinese electric vehicle makers have an unfair advantage because of government subsidies and will recommend higher tariffs.
“If there are no trade barriers,” Musk said said Earlier this 12 months, Chinese automakers “almost wiped out most other automakers in the world. They’re extremely good.”
“Nobody can compete with BYD on price. Period,” Michael Dunne, CEO of Asia-focused automotive consultancy Dunne Insights, told The Financial Times in January. “Boardrooms in America, Europe, Korea and Japan are in shock.”
Interestingly, Australia, which has no legacy automakers to guard, is just not putting up barriers to the Chinese EV makers which are rapidly expanding there.
In Japan, Nissan and Honda last month announced a once-unthinkable partnership to jointly develop electric vehicles amid the looming threat from Chinese electric giants.
“The rise of emerging players is getting faster and stronger,” said Honda President Toshihiro Mibe told The Financial Times. “Companies that cannot respond to the changes will be wiped out.”
Similarly, Ford said in February that it was willing to work with rivals to scale back electric vehicle production costs, namely GM Signaling an identical willingness. Both referred to the increasing threat from China.
As for Volkswagen, that is what it said could work together on mass market electric vehicles with the French rival Renault, also with a view to young Chinese talent.
When it involves the competition for electric vehicles in China, VW boss Blume said his carmaker “should not have utopian expectations.”
