Chinese cars are gaining more and more ground on the international market, while apparently lower prices are making them competitive in the face of European, Japanese and Korean producers.
Although state subsidies play an important role in this distinction, they are not the only reason. According to consulting company AlixParters, one of the main priorities of Chinese producers is the easiest access to raw materials and greater control over the supply chain.
According to company data, the production of a Chinese electric car costs an average of about 20,000 euros and 100 euros, while production of a comparable car in Europe totals about 30,000 and 700 euros. This creates a difference of more than 10,000 euros, which is difficult to compensate for by European producers.
Much of the advantage is related to the processing of raw materials. AlixPartners estimates that 80 to 85 percent of the world’s capacity for refining and processing of major materials lies outside Europe, while a significant portion is concentrated in China.
This is especially important for the electric car industry, where batteries make up one of the main components of the cost. Thanks to access to these materials, Chinese producers can produce battery cells at a cost of about 40 euros lower for kilowatt-hours compared to European producers.
In addition to lower costs, Chinese companies also have a priority in speeding up the development of new models. Many manage to develop and present a new model in less than 24 months.
This is reflected in sales: Some 76 to 80 percent of Chinese brands sold are models that have been on the market for less than three years. On the other hand, at the German manufacturer Volkswagen, this percentage is only 34 percent.
China’s supremacy in the automotive industry is thus based not only on state subsidies but also on lower production costs, control over raw materials, and the ability to bring new models to the market.
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Source Layer: Signal