Mercedes-Benz said that the electric car market was “brutal” to carmakers due to intense competition forcing them lower prices.
The sales of electric cars in Europe and China are on the rise, while the US is further behind. However, the rush of new launches puts pressure on European car manufacturers, who are now struggling to compete against cheap models from China.
Harald Wilhelm said that the electric vehicle industry is “a pretty harsh space” on a Thursday analyst call, Reuters reported. This was after the German automaker reported a drop in profits.
Wilhelm stated that some manufacturers are pricing battery-electric vehicles (BEVs), despite the higher production costs, similarly to petrol versions. This is due to “intense competition” in price. He said that he could not imagine that the status quo was sustainable for everyone.
The transition of established carmakers from petrol and diesel cars to electric cars is in various stages. JLR, Britain’s largest car manufacturer, announced on Thursday it would produce the electric version its Land Rover Defender in its plant in Nitra. Slovakia. Tata’s company chose Slovakia to produce Defender for 2019 in a blow against the British auto industry. However, the company has now announced that it will be building at least six Jaguar & Land Rover electric models in the UK.
Barbara Bergmeier said that JLR’s director of industrial operations would be building electric Defenders in “this decade”.
The Chinese government, which has heavily subventioned the industry, is putting pressure on European automakers to switch to electrical vehicles. Chinese carmakers had never been able to export large quantities of petrol or diesel cars to Europe and the US. But now, brands like BYD and Nio are gaining rapid market share, alarming traditional carmakers.
Last month, the EU launched an investigation into Chinese subsidies for electric vehicles. This could lead to import tariffs to protect the European industry.
Mercedes-Benz is not the only car manufacturer that agrees on the electric vehicle market. Volvo, owned by Geely in China, plans to only sell electric cars by 2030. This is one of the fastest transitions from petrol and diesel internal-combustion engines (ICEs).
Jim Rowan said that Volvo had not “engaged in price discounts”, and added: “Most indiscipline in this sector has been mass market.”
Volvo reported an operating profit of 4.5bn Swedish Krona (£330m), more than twice the same period last year.
Rowan, the Scotsman who led Dyson’s fan and dryer company, has said that the new electric model of the EX30 sports utility vehicle will be just as profitable as the petrol and diesel models. This is a benchmark for established car manufacturers. Volvo announced last month that it would stop producing diesel cars by early next year.
Rowan stated that Volvo’s electric cars had a profit margin of 9% during the period. The EX30 is expected to increase this to 15%-20%. Volvo’s new EX30 has seen a stronger demand than expected, with a starting price of £34,000 that is lower than other electric cars from the brand.
Rowan stated that the EX30 brought us to parity in price. This is a pivotal point for us. We’ll be among the first to achieve BEV/ICE parity.”
Rowan stated that he is not in favor of tariffs between the EU and China. However, he added that Volvo has “naturally hedged against” them due to its factories located in both locations.