European Carmakers Anxious about China’s EV Dominance at Munich Car Show

European Carmakers Battle to Bridge EV Cost Gap with China

At the Munich IAA mobility show, European car manufacturers face a formidable challenge in producing affordable electric vehicles (EVs) and closing the gap with China’s lead in creating budget-friendly models, according to industry executives.

Renault CEO Luca de Meo: “We have to close the gap on costs with some Chinese players that started on EVs a generation earlier,” de Meo told Reuters at the car show, emphasizing that when manufacturing costs decrease, so will prices. In the first half of 2022, the average EV in China cost less than 32,000 euros ($35,000), compared to approximately 56,000 euros in Europe, as reported by Jato Dynamics.

BMW CEO Oliver Zipse: In reference to China’s expansion into Europe, Zipse stated, “The base car market segment will either vanish or will not be done by European manufacturers.”

Mercedes-Benz and BMW: These automakers are introducing the CLA compact class and Neue Klasse, respectively, with a focus on extending range and efficiency while halving production costs.

Volkswagen CEO Oliver Blume: Volkswagen aims to reduce battery cell costs by 50% through partnerships in China.

Xpeng President Brian Gu: While European carmakers currently lag behind China, they have made significant commitments to EVs through partnerships and substantial technology investments. Gu emphasized that it would be unwise to underestimate these major car manufacturers’ determination to adapt to this crucial transition.

Auto industry analyst Ferdinand Dudenhoeffer: Chinese expertise in battery production, which can constitute up to 40% of an EV’s cost, gives them a significant advantage. Dudenhoeffer highlighted that Chinese battery manufacturers establishing themselves in Germany are contributing to lowering EV costs. He urged German politicians to avoid “stupid decoupling strategies” that could drive these companies away from the country.

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