In the race for cheap electric cars, Europe and the US have recently overtaken China, and they better get their act together. European and American manufacturers could face a crisis if they cannot reduce manufacturing costs, and China seems to bear some of the blame.
64% of the total production of electric vehicles remains in the Asian giant, with an estimated sales of 59% worldwide in 2022, according to the World Economic Forum.
This year, BYD, one of China’s leading electric car manufacturers, sold only 3,000 fewer cars than Tesla, however. the two differ in one big thing: the price.
Elon Musk’s company sells 4 models that range from 40,000 to 100,000 dollars, while BYD has the Seagull, a car presented this year that can be had for 73,000 yuan, that is, about 10,000 euros.
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In Europe, for example, Renault stands out, having already announced that intends to cut the price of electric cars by 40%to match them with those that use fossil fuel, and Stellantis, with the Citroën e-C3 SUV, from 23,300 euros.
The race to reduce the cost of the electric car
One of the components that has the most weight in the final price of the car is the battery, which can represent up to half the cost of the product. For this reason, the objective of manufacturers in Europe and the United States is to reduce costs.
“Today’s automakers are just turning to low-cost cars, knowing they have to or they’re going to lose out to the Chinese manufacturers,” he said. Reuters Andy Palmer, president of startup Brill Power and former CEO of Aston Martin.
Precisely, Palmer’s startup, focused on battery management systems, can increase the autonomy of vehicles by 60% by making the batteries smaller.
However, there is one additional problem: the raw materials required for the production of batteries.
Again, China dominates this area, both mining and processing: 90% of the entire battery supply chain is controlled by the giant, according to a Morgan Stanley report.
So far, some European actions have been accompanied by collaboration with Chinese battery manufacturers, such as the announcement of construction of a European plant between Stellantis and CATL, another Chinese manufacturer – the most important with BYD.
In short, European manufacturers must reduce costs no matter what; Otherwise, China may continue to take a very important part of the pie.