“Troublemaker Tesla” and Chinese e-cars: why they are 40 percent more expensive in Germany

price war on the world’s largest car market
“Troublemaker Tesla” and Chinese e-cars: why they are 40 percent more expensive in Germany

Electric cars are often significantly more expensive in Germany than in China – by up to 41 percent. “Troublemaker Tesla” is primarily responsible for this, as a study by the Center Automotive Research shows. But how exactly can the reasons for the large price differences be explained?

The car market in China is now the most important in the world. Nowhere else in the world are more cars registered than in the People’s Republic. Of particular importance: so-called NEV (New Energy Vehicles), i.e. electric and plug-in hybrid cars. While battery-powered vehicles are (still) comparatively expensive in Germany, sales prices in China are significantly lower.

A list price comparison by the Center Automotive Research (CAR) in Duisburg has shown that e-cars from Chinese manufacturers are “sometimes significantly cheaper” in China than in Germany. For example, the BYD Tang with a 90.3 kWh battery and a range of 600 kilometers costs around 37,700 euros in China. In Germany, on the other hand, the price for the all-wheel drive variant with an 86.4 kWh battery is a whopping 71,400 euros.

The NIO ET7 with a 75 kWh battery and 653 hp is available in China for the equivalent of around 61,000 euros, and in Germany it costs almost 82,000 euros. On average, e-cars in China are 41 percent cheaper than in Germany, according to the study. But how can that be?

competition for lower prices

Although the features of entry-level models in the People’s Republic are sometimes poorer, the large price differences can be explained differently. Accordingly, the Chinese in Germany would have to deal with significantly higher import and advertising costs. On the other hand, better equipped models with larger batteries would be offered in Germany.

In China, on the other hand, “the fight for a good starting position in the business with electric cars – and thus the entry-level price of models – is much more pronounced than in Europe”. This results in competition for lower prices.

“Tesla has started the price war in China”

When it comes to battery-powered vehicles, US manufacturer Tesla and Chinese manufacturers are in the lead. According to the study, the former is the “troublemaker” in the automobile market. Because the Model 3 and Model Y from Chinese production are offered significantly cheaper in China than in Germany. The Model 3 is available for the equivalent of 30,653 euros. For comparison: in Germany it costs 47,560 euros. The Tesla Model Y was the best-selling electric car in China last month. The list price for it is the equivalent of just under 35,000 euros, while in Germany it is sold at a starting price of 47,560 euros. “Tesla has clear competitive advantages in its production system over all western car manufacturers,” it says.

Prof. Ferdinand Dudenhöffer, Director of CAR, says when asked by the star: “Tesla started the price war in China.” With the price war, Tesla boss Elon Musk makes less profit per car, “but he sells significantly more cars and the more he sells, the better his cost position becomes.” Because if you win in China, you win tomorrow’s car market, Dudenhöffer explains Musk’s thinking. “And what applies to Model Y for Tesla can be applied to almost all electric cars sold in China and Germany.”

BYD, now the market leader in electric cars in China, is also putting increasing pressure on German car manufacturers. “The Chinese and Tesla are suffocating the Europeans on the price side,” states the CAR study.

German car manufacturers have almost 15 percent lower prices in China

Other large manufacturers, such as Toyota, Honda or Ford, also sell their e-cars for an average of almost 43 percent more expensive in Germany than in China. As a result, the German car manufacturers are apparently also trying to withstand the strong price war and are selling their vehicles in China at lower prices than on the home market. BMW sells the iX M60 in the People’s Republic for the equivalent of 132,560 euros and in Germany for 143,100 euros (with different performance data) – despite the import. The VW ID.3 with 170 hp and a range of 430 kilometers costs the equivalent of 21,718 euros in China, in Germany VW sells the model with the same range and 204 hp for a proud 39,995 euros. On average, the prices here are almost 15 percent below German prices.

Manufacturers face higher costs due to the taxes incurred for imported vehicles. This is an additional risk in the future market of NEV in China. The study states: “Those who produce in China have more opportunities to set attractive prices and thus not lose market share in the competitive environment.” That is why, for example, the China version of the VW ID.3 is offered in the People’s Republic for a good 18,000 euros cheaper than in Germany.

Western automakers need to recalibrate production costs for electric cars

Dudenhöffer expects that because of the large price differences between China and Germany, not only Tesla will remain in the price war in Europe, “but the Chinese car manufacturers will come to Europe even faster with even better conditions”. Western carmakers would have to recalibrate their production processes and the current high production costs for electric cars. Otherwise there is a risk of losing customers.

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