On September 5, on the opening day of Germany’s largest Munich Motor Show (formerly known as the Frankfurt Motor Show), the German media Economic Weekly had a reflective headline:

“Warum die IAA zur „China-Show“ wird – Why the IAA (Munich Motor Show) is becoming the “China Show”.

Nearly 50 Chinese companies participating in the exhibition came with a bright vision of expanding cooperation in the Sino-European automobile industry. However, their European counterparts still smelled a hint of danger from BYD's booth area, which was twice that of Mercedes-Benz and the oriental faces that appeared much more frequently than before. breath.

Current Renault CEO, Renault Alliance Chairman and CEO Luca de Meo admitted at the auto show: "Chinese electric car manufacturers are one generation ahead of Europe." Stellantis CEO Carlos Tavares said that with Chinese manufacturers The competition will be "extremely brutal".

"Pirate Captain" Schultz

In a speech, German Chancellor Schulz, who was supposed to be recuperating from an injury, decided to attend to cheer for the local industry. "In the 1980s, some people said that Japanese cars would dominate the market. Twenty years later, 'Made in Japan' cars became 'Made in Korea' cars and are now considered Chinese electric cars."

He insisted that German carmakers were becoming more competitive, "without a doubt."

However, the German Chancellor's "I have the advantage" cannot conceal the seriousness of the reality. Last year, sales growth of new energy vehicles in Europe was sluggish, with the annual growth rate being only 14%. In 2020 and 2021, this figure is 142% and 66%.

The important reason for the slowdown in growth is that in the context of the reduction of subsidies for new energy vehicles and the increase in raw material prices, European car companies have chosen to work together to increase prices to ensure profits. The cost is that more and more Europeans cannot afford European cars. produced electric vehicles.

In fact, for European automakers, the problem that Europeans cannot afford electric vehicles is not a serious problem. It can even become a negotiating weight for companies to pressure politicians to relax the ban on the sale of fuel vehicles. But if Europeans cannot afford local electric cars, but Chinese electric cars appear at the Munich Auto Show with an extremely "people-friendly" image, the atmosphere becomes subtle.

In the words of BMW Group CEO Oliver Zipse: “This is an imminent risk.”

1 Can't afford it, can't recharge it

The European Automobile Manufacturers Association (ACEA) warned in April this year: A large number of Europeans can no longer afford electric cars.

The survey results show that in countries such as Germany and France, where the per capita net income exceeds 32,000 euros, the penetration rate of electric vehicles has reached more than 30%. However, in countries such as Central Europe, Eastern Europe, and Southern Europe where the per capita net income is less than 13,000 euros, the penetration rate of electric vehicles is less than 9%. In Slovakia, where the per capita net income is just over 10,000 euros, the penetration rate of electric vehicles is only about 3%.

Considering that the unemployment rate in Europe is not high, it is difficult to say that the inability to afford electric cars is because European people do not work hard this time. Sluggish demand is sometimes a problem of supply - in Europe, the purchase and use costs of new energy vehicles are indeed a bit high.

First of all, the price of electric cars in Europe is indeed high. On the Electric Vehicle Database website, sort the prices from low to high. The cheapest electric car at the top of the list is Renault's Dacia Spring, which sells for 21,000 euros [4]. In China, the original version of this model, Dongfeng Nano Box, starts at 48,700 yuan, with a price difference of 3-4 times.

The BYD Dolphin exported to Europe is the fifth cheapest electric car, priced at about 30,000 euros (the domestic starting price is 110,000 yuan, about 14,000 euros), but the battery has a full charge of 44.6 degrees, which is the same in Europe. Twice the price of models.

Ranking of the cheapest electric cars in Europe

Compared with China, where the price of petrol and electricity is close to the same, there is still a considerable price gap between electric vehicles and fuel vehicles in Europe. The starting price of a Volkswagen Golf is about 25,000 pounds, while the starting price of a similar-sized all-electric Volkswagen ID.3 is about 36,400 pounds. .

If the purchasing power of electric vehicles is used as the benchmark, the European people will find that the pound and the euro have depreciated hugely against the renminbi. Take Slovakia as an example. If locals want to buy a Dacia Spring, they may have to save for two years without eating or drinking. However, if calculated based on the per capita disposable income of Chinese residents in 2022, it only takes a little over a year to withdraw the full amount. The sister model of Dongfeng Nano Box.

Of course, what keeps Europeans away from electric vehicles is not only the high price, but also Europe's new energy infrastructure. In Europe, new energy vehicles have not yet achieved the "same price for petrol and electricity" version, but energy supplements are already far ahead in achieving the "same price for petrol and electricity".

This is inseparable from the overall background of the Russia-Ukraine conflict. This war once caused the cost of natural gas to skyrocket in Europe, leading to a sharp increase in electricity prices in Europe whose power structure relies heavily on natural gas.

However, with natural gas prices falling and electricity prices returning to normal, the prices of public charging piles in Europe are still astonishing. Taking the Hyundai Ioniq 6 as an example, the public DC charging cost in the UK is up to 0.23 euros/mile (19.7p/mile), which is almost the same as a gasoline car of the same level and more than 30% more expensive than a diesel car of the same level.

Comparison of refueling costs between Hyundai Ioniq 6 and similar fuel vehicles

Not only are charging prices high, charging piles in Europe are also being built slowly. As of 2022, EU countries have a total of 479,000 public charging piles, with a vehicle-to-pile ratio as high as 16:1. According to the "Fit for 55" plan, by 2030, the number of public charging piles in EU countries needs to expand 8-10 times.

However, the current efficiency is far from reaching the target. It is understood that the city of Stockholm, which currently has the highest pile construction efficiency, takes an average of 7 months to build a 150kW DC supercharging pile, while other cities take about 20 months. This is The speed of building piles in China would probably only lead to death by starvation.

Faced with the energy replenishment dilemma, Germany once again takes the lead. Prime Minister Schulz announced at the auto show that Germany will introduce laws in the near future, "requiring 80% of service area operators to provide electric vehicles with a power of at least 150 kilowatts." Charging pile."

Even the Chinese government, which is enthusiastic about electric vehicles, has not made such radical demands.

2 Can't afford to make or repair

However, it is difficult to say that whipping charging service providers with legislative whips will inspire Europeans to be enthusiastic about buying electric vehicles. Europeans cannot afford electric cars. The essential problem is that the cost of the entire industry chain is too high.

UBS recently dismantled a BYD Seal and was shocked to find that the cost of this car is 15% lower than the Tesla Model 3, which is also produced in China, and is lower than the same level of model produced by Volkswagen in Europe. 35%. The huge cost gap has become a natural barrier preventing Europe from realizing vehicle electrification.

Where does the cost gap come from?

The most critical thing is the supply chain. Electric vehicles have changed the composition of the automotive supply chain from the bottom up. A large number of delicate mechanical structural parts have been replaced by power electronic equipment, suddenly opening a gap in the fortress of the European automotive supply chain.

Taking power batteries as an example, after three years of rapid development, Europe finally pushed Northvolt, the "hope of the whole village", into the mass production stage. But compared to China’s power battery industry, which is reeling from excess production capacity, Europe is suffering from insufficient battery production capacity.

Last year, the domestic power battery production in Europe was about 69GWh, but the demand for power batteries in Europe during the same period has reached 120GWh, which means that a large number of batteries rely on imports.

Not to mention that ternary lithium batteries are commonly used in Europe. Even if cheaper lithium iron phosphate batteries are introduced, the cost is no longer simply the superposition of material costs and manufacturing costs, but includes transportation costs, tariffs, EU certification costs, etc. I'm afraid it would be easy to double it.

Under cost pressure, cultivating a local power battery supply chain is an inevitable choice. Some car companies are willing to take action personally. For example, Volkswagen has chosen to cooperate with Northvolt and Guoxuan Hi-Tech to jointly build 60GWh of power battery production capacity in Germany.

Northvolt Swedish headquarters

A similar stage has also occurred in China. But the problem is that when Europe's new energy automobile industry wants to "explode" power battery production capacity, they do not have a developed consumer lithium battery industry as a basis.

The European Commission predicts that by 2025, the number of engineers who will need to be trained and retrained in the battery industry will reach 800,000. With a weak industrial chain foundation and small scale, local European battery companies are struggling in the battery industry that focuses on economies of scale.

In fact, not only are European battery companies slow to start production, hindered by talent gaps, many Chinese factories are also not progressing well in establishing local factories. An industry insider told us: "When battery production equipment in some European factories breaks down, they need to contact domestic engineers to solve it. The efficiency is very low."

In addition to the large-cost battery, another place that reflects the cost gap is labor cost. Many people have heard about the high incomes in Europe. In Germany, the per capita monthly income of people working in the automobile industry is about 2,850 euros, or about 20,000 yuan, which is almost twice the per capita monthly income of domestic automakers such as BYD.

UBS comprehensively compared the costs in China and Europe and concluded that if BYD builds a factory in Europe, the cost of its European business will be 10 higher than that of direct export (complete vehicles plus transportation costs, tariffs, and certification costs). %.

European governments have never thought of following China's lead in using subsidies to fill the cost gap between electric vehicles and fuel vehicles. However, Europe's subsidy policies have several main characteristics: they are small in intensity, decline quickly, and are unfriendly to car companies.

For example, the subsidy policy introduced by Germany in the early years provided a subsidy of 4,000 euros for pure electric models, half of which was borne by the government and car companies. During the same period, China's pure electric passenger vehicles can receive subsidies of up to more than 80,000 yuan, jointly funded by the central government and local governments.

The real validity period of EU subsidies is concentrated in 2020 and 2021. Bicycle subsidies for new energy vehicles in Germany and France once rose to 7,000 euros, but will decline significantly in 2022.

In Europe (especially Germany and France), which operates under a small government model and has a highly developed fuel vehicle industry, the policy of providing high subsidies for new energy vehicles actually lacks the political ground for long-term survival. With the withdrawal of subsidies in 2022 and the skyrocketing prices of electricity and raw materials, the sales growth rate of new energy vehicles in Europe has fallen rapidly.

3 The End

The choices made by European automakers in this situation are also intriguing. In January this year, Renault announced the discontinuation of the Renault Zoe, a small electric car that was once popular in continental Europe. The price of this model increased by 11% to protect profits when raw material and electricity prices soared last year. However, due to meager profits, it still could not escape the fate of exiting the market.

Similar things have happened in the Chinese auto market. In the first half of 2022, electric cars such as the Euler Black and White Cat and Changan Benben e-Star also stopped production one after another due to rising costs. However, Chinese car companies have not given up on this market. In the first half of this year, electric cars such as Wuling Bingo and BYD Seagull made a comeback and continued to push the electric car market downward.

If Chinese car companies are pursuing the idea of "exchanging scale for costs and lowering prices for sales," European car companies are exactly the opposite. They would rather increase prices and reduce volume to ensure profits.

This phenomenon of "making cars based on financial statements" has a lot to do with the power structure of European car companies.

Professional managers with short tenures are exhausted just by responding to the board of directors' inquiries about short-term performance and dealing with conflicts between car companies and labor. It is difficult for them to have enough reputation and courage to promote the progress of a car company despite ugly financial reports. Leap forward reform. Radical reformists who tried to go too far, such as former Volkswagen Group CEO Herbert Diess, have been forced out.

New energy vehicles have indeed divided the world into two sides. On one side, China's automakers are fighting bloody battles; on the other side, as He Lei, the founder of Weibo's new travel company, shared, Europe is still lingering on the rhythm that once belonged to it.

"Friends from European car OEMs told me that if they don't pick up their children from get off work at 6 o'clock, the kindergarten teachers will really call the police."

View more at EASELINK