Chinese electric cars: this is why they are more expensive in Europe than in China

“Chinese car” no longer rhymes with “low cost”. Indeed, Chinese manufacturers operating in Europe display their models at prices very close to those of “traditional” manufacturers, and therefore sometimes far from the prices applicable in the local market.

A car in the collective imagination” Made in China not necessarily a guarantee of quality, the Middle Kingdom is still struggling to leave its old demons behind, the product made in China is of lesser quality than the product made elsewhere. But that’s changing as we’ve seen recently with Aiways and its U6. Made in China“.

True, there was a time, especially for some industries such as textiles or electronics, but it is decreasing. Many manufacturers now produce in China for the European market, and the differences in design are no longer necessarily clear.

The end of cheap products in China?

When it comes to a Chinese manufacturer’s product made in China, prejudices are rampant. Even if they are justified at times, it is clear that we were able to do this at the last Paris Motor Show, where Chinese manufacturers were present in large numbers. Chinese cars no longer envy European or American manufacturers in certain aspects.

Manufacturing in China is all about minimizing production costs and thus keeping prices down. But this adage is less and less true in today’s context, and this is true even in the automotive industry where we may think that a Chinese electric car is cheaper than its European equivalent, but in some cases it is not!

There are of course counterexamples, starting with the huge MG4 we were able to test recently, which costs an average of 40% less than a Renault Mégane E -Tech or a Volkswagen ID.3 (€22,990 minus bonus). One can imagine a Chinese manufacturer cutting their margins to come and enter the European market.

But there are also examples of some Chinese manufacturers modeling their technology and know-how on European manufacturers at substantially equivalent prices, and above all.

Prices are similar to European competitors

This is the case, for example, of the manufacturer BYD, which announced the prices of its three models sold in Europe. In France, it starts at Atto 3 €38,000while the premium sedan and SUV are called Han and Tang respectively €72,000. When comparing prices in China, the Han, for example, sells for about 27,500 euros more than its price in China.

With these prices, BYD positions itself above the “access premium” segment (Volkswagen, Peugeot, etc.) and comes to play elbow with the German tenors (Audi, Mercedes, BMW), because these prices are similar to Very Good prices. equipped Audi Q4 or BMW i4 M50. Even in its top-of-the-line Performance version (from €66,490), the Han is priced above the Tesla Model 3 (though prices have risen significantly in recent months).

And BYD is not the only Chinese manufacturer to showcase its products at the same price as European manufacturers. Great Wall Motors recently launched several products in the Old Continent, products are also sold in China.

So the Great Wall Wei Pai Mocha PHEV (called the “Coffee 01” in Europe) starts at €55,900 versus the equivalent of €40,700 in China. Currently only sold in Norway, the Lantu Free model starts at 719,000 Norwegian kroner (about 67,300 euros before taxes) versus the equivalent of 46,000 euros in China.

How can we explain such a price difference?

Except when the Chinese car came to the old continent quality should be at market standardsSince Chinese manufacturers do not (yet?) have factories in Europe, they must also be imported. But since Chinese brands choose to go to Europe, why don’t they build factories on our soil like Tesla?

This is a balance that can be found in reality, and if sales progress, producers will necessarily have no choice but to move production closer to their export market. Without forgetting that governments now want to favor domestically produced models by indexing state aid to the relevant products. It has recently been the case in the United States, and according to recent statements by the French government, it should be the same in France more or less shortly.

Building a factory is obviously expensive and the market needs to guarantee some stability before considering manufacturing in the European market, especially as costs are not the same. Let’s not forget that European legislation is complicated in every sense of the word, and it’s not Tesla who will argue otherwise with the Gigafactory in Berlin, which is not an easy task to get off the ground.

A path full of pitfalls

Currently, Chinese manufacturers export their models to Europe by sea. Exporting, and the logistics that go with it, obviously has a significant cost, a cost directly reflected in the final price. It goes without saying that inflation also plays an important role, because with the increase in energy prices, export costs also explode.

Chinese cars also meet some political obstacles. For example, due to dumping (experience of selling in foreign markets at a lower price than the national market, or even lower than the cost price), Many Chinese goods exported to Europe are taxed to prevent this phenomenon.

In recent years, Chinese truck tires and electric bicycles have been affected by this tax. Then domestic protectionism plays an important role in these prices.

Nevertheless, despite all these “restrictions”, there is still an advantage for Chinese manufacturers to produce in China, because the production costs are much lower than the same model produced in Europe. For example, the German-made Tesla Model Y was not significantly cheaper than the Model Y exported from China to Europe. On the contrary, there has been no price drop (yet?).

For Chinese manufacturers positioning themselves in terms of price compared to European manufacturers, it’s also a way to show that their cars don’t have much to envy to what’s made in Europeand they can also be registered as a real alternative.

It’s also a risk because they can’t sell a European model that’s equivalent in all respects for the same price on the pretext that the European customer will in most cases prefer the more “local” model. ” model.

Europe, a separate market

In general, the European market is complicated for manufacturers from other continents. For example, Toyota, which has been in control for many years in North America, Europe does not have the same auraalthough its hybrid products are the best sellers.

Honda and Subaru, which are hits in the US and the local market, cannot enter Europe and face such a market. The heritage of the automotive industry is very important. The only recent coup surely comes from Tesla and its Model 3, as it was the best-selling electric car on the Old Continent in 2021. But he had to work hard for it, surfing the help of the government to show an attractive price. Using technological advances compared to European tenors.

Therefore, Chinese manufacturers will have a lot of work to do in Europe to achieve their goals, and the first goal seems to be above all to put an end to the bad image that Chinese brands can create in Europe. But it will probably take several decades. Some, like MG, charge low prices, others, like BYD, prefer to follow local manufacturers… Who is right? Who is wrong? Answer within a good ten years.

In all cases, Chinese manufacturers will probably adopt the same method as Japanese manufacturers More than 20 years ago. When Japanese cars first hit the European market, they faced the same problem as Chinese cars do today. However, Japanese manufacturers have managed to make a difference with the SUV, especially the hybrid for Toyota, and even the Qashqai for Nissan in 2007, without forgetting the famous Japanese sports cars that are no longer relevant today. but which was very successful in Europe in the 90s and 2000s.

Already interesting sales figures

According to a report by the NGO Transport and Environment, Chinese manufacturers already account for 5% of all electric cars sold in Europe since the beginning of the year. All this without an abundance of products, because it is MG that currently offers the most electric cars. With the arrival of new manufacturers, this number may increase, according to the organization. According to estimates, Chinese manufacturers could supply Europe with 9-18% of electric cars in about two years.

Internationally, Chinese manufacturers will continue to grow. According to GlobalDataby the end of the decade China will account for 60% of the world’s electric car supply. Growth is expected to be exponential as the Middle Kingdom is expected to account for 25% of global electric vehicle sales by 2025.

According to research by Jato Dynamics, one in five electric models sold in Europe is now assembled in China. And yet, only 18% of electric models sold in the Old Continent are Chinese. Why? For a simple and good reason, some European manufacturers have already moved their production to Asia, for example Dacia or BMW for certain models.

While sales of electric cars have stagnated in Europe, Chinese manufacturers are increasingly involved. And this can lead to various problems.
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