This post was inspired by a video from The Electric Viking titled Chinese EVs killing Legacy Auto because people can REALLY afford them but I don’t think the title tells the real story.
Some things that need to be talked about are:
- Vehicle prices in China vs. elsewhere
- EV vs. ICE car prices
- Manufacturing costs
The image shows average prices around the world of Chinese brands vs. non-Chinese brands. The differences are huge. In some places the average price of a non-Chinese brand is twice that of a Chinese brand. But, what that doesn’t mean is that equivalent Chinese brand vehicles cost half the price. There are expensive Chinese-made cars but a much larger percentage of vehicles from Chinese brands are way less expensive. While labor cost is a consideration it is not a big part of the difference. The difference is mainly the type of car sold. Lots more K-car sized vehicles, sub-compacts and such. Thus, there are models that the average person can afford.
A second consideration is that the price of an equivalent EV as an ICE vehicle has reached price parity. In the US and, to a lesser extent, Europe, ICE cars tend to have a higher price than an equivalent EV. With the exception of Tesla, US and European car manufacturers just haven’t figured out how to make EVs at a reasonable cost. Companies such as Ford lose tens of thousands of dollars on every EV they sell in spite of their higher sticker price.
This manufacturing cost difference is significantly influenced design and by product volume. One design issue is that many EVs from non-China manufacturers are really ICE car retrofits. That contributes to wasted space and a structure to support components (like the IC engine) which don’t exist in EVs. There are also “legacy” production lines which use much more labor to build a car. I site what Sandy Munro has said about the evolution of the Tesla Model 3 and Y.
At this point many big auto manufacturers are slowing down their conversion to EVs. They claim it is because of faltering demand but I expect a bigger contributor are increasing financial losses. This, of course, is just going to help China take over more market.
