Volkswagen CEO does not see Chinese EV makers as a threat as prices double overseas

According to Volkswagen CEO Oliver Blume, European manufacturers have an advantage over Chinese EV makers. VW leader said that the Chinese offer their vehicles “at twice the price they pay in China” of that in Europe.

VW is not threatened by Chinese EV makers, CEO says

Although Blume did acknowledge that “The Chinese have learned how to build cars over the last few decades” at the IAA Mobility show in Munich, he believes VW still holds an edge.

“We have the vehicle know-how, we have the level of quality. And we have a brand legacy. The newcomers don’t have that. So we see ourselves as well positioned,” Blume stated, according to German newspaper Automobilwoche.

Despite the share of EVs shipped to Germany from China more than tripling (28.2% vs. 7.8% last year) in the first quarter of the year, Blume is standing by his word.

The VW Group and Porsche CEO said Chinese EV makers can build cars for around 20% less in China. However, they will “not be able to offer the level of costs they offer in China in Europe,” he explained.

Due to the high costs associated with adapting vehicles to European requirements and establishing a sales network, “We can see on the market that the Chinese offer their vehicles to us at twice the price they pay in China.”

Competition is still heating up

Blume admitted the new competition was still dialing up the heat in the auto industry. “Competition is always a good thing. It forces us to become better.”

Volkswagen will need to position itself better to maintain competitiveness. “We will have to work hard on the cost side,” Blume explained.

One of the biggest areas of focus is the battery, which is the primary cost of an EV. With its new unified cell, Volkswagen aims to reduce costs by 50%, enabling cheaper EVs.

In March, Volkswagen teased its affordable ID 2all electric vehicle concept, starting under $27,000 (€25,000) with up to 279 miles range (450 km).

Blume also sees having ICE vehicles in its lineup as its transition to electric as an advantage over all-EV brands like NIO and BYD. He expects ICE sales to finance VW’s transition, whereas all-EV brands need to find alternative funding sources.

Electrek’s Take

The comments from Blume are interesting, given Volkswagen is outsourcing technology in China. VW revealed a $700 million investment in Chinese EV maker XPeng for a nearly 5% stake in July.

Furthermore, Audi and Chinese state-owned automaker SAIC Motor are collaborating to develop new electric models in the region. Outside of China, VW placed a large-scale order with Hyundai’s supplier, Hyundai Mobis, for Battery Systems Assemblies.

Blume is speaking about the European market, but those are bold comments for a company already outsourcing tech in the region.

Several new Chinese EV brands are expanding their presence in Europe, including BYD, NIO, and XPeng, to name a few.

BYD brought several EVs out at the IAA Mobility show in Munich, including the Han, SEAL, DOLPHIN, and upcoming SEAL U (D-segment SUV), arriving in the first half of next year. It will start at 42,990 euros ($46,100) in Germany.

Meanwhile, Volkswagen’s ID.5 is priced at 47,595 euros ($51,050), while the new flagship ID.7 will be in the mid-50,000 euro ($53,600) range.

BYD sold 2,492 vehicles in Europe through July, up from 1,170 last year. The Atto 3 accounted for 1,977 of those, according to info from Dataforce (via Automotive News Europe).

Michael Shu, managing director of BYD Europe, said,

We have made significant progress in entering new markets in Europe. Just twelve months ago, we introduced our brand to Europe and in less than a year, we created a presence for our brand in 15 European countries and opened over 140 stores. We are working in conjunction with the very best dealer partners to create a network that delivers premium customer services and retail experiences.

We’ll see how the story plays out over the next few months.