Chinese car manufacturers have a significant cost advantage over their European counterparts in the production of electric vehicles (EVs), according to Patrick Koller, CEO of vehicle supplier Forvia.
Speaking at the CES convention in Las Vegas, Koller stated that Chinese manufacturers are able to produce EVs for €10,000 less than their European counterparts. This cost advantage is expected to put pressure on European manufacturers in their home market, as consumers seek out cheaper EVs.
Koller also noted that the issue is “more dangerous” for Europe than the US, as high duties have limited China’s market share in the US. Forvia, a major supplier to Chinese car manufacturers, including low-cost EV leader BYD, is the seventh largest vehicle component maker in the world.
A study by JATO Dynamics has found that the average price of electric cars in Europe has increased from $51,424 in 2015 to $58,652, while the average price in the US has increased from $53,038 to $63,864.
In contrast, the average price in China has decreased from $70,203 to $33,440, making EVs more affordable than traditional gasoline-powered cars. Chinese EV manufacturers have lower research and development costs, lower levels of capital spending, and lower labor costs than their European counterparts, according to Patrick Koller, CEO of vehicle supplier Forvia.
These cost advantages have allowed Chinese manufacturers to produce EVs at a lower price than their European counterparts. Despite the lower prices, Chinese EVs have earned high safety ratings from European regulators, and China currently holds a 5.8% share of Europe’s EV market, according to French auto consultancy Inovev. This market share is expected to increase in the coming years as Chinese brands produce more lower-cost models.
In contrast to Europe, high duties on Chinese-made vehicles in the US have kept China’s share of the American car market relatively small. Forvia CEO Patrick Koller stated that the outlook for global vehicle demand in 2023 is uncertain, and that the outcome could be significantly impacted by the ongoing conflict in Ukraine.
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