According to the CEO of vehicle supplier Forvia, Chinese automakers can produce an electric car for 10,000 euros ($10,618) less than their European competitors, a significant cost advantage that will put pressure on European automakers in their home markets.
As European consumers seek cheap EVs, Forvia chief executive Patrick Koller told the CES convention in Las Vegas on Wednesday that China was producing “good vehicles” and Imports could not be stopped by Europe.
The issue is “more dangerous” for Mr. Koller claimed that the US market share of China was more constrained by high duties than the EU.
The seventh largest vehicle component manufacturer in the world is Forvia, which was founded when French auto supplier Faurecia acquired 82% of German auto supplier Hella. It provides many Chinese automakers, including the market leader in affordable EVs BYD.
According to a study by JATO Dynamics, which provides an analysis on industry trends, the average price of electric cars has decreased in China from $70,203 to $33,440 since 2015, bringing it below the price of gasoline cars. In contrast, the average price of electric cars has increased since 2015 in Europe from $51,424 to $58,652 and in the US from $53,038 to $63,864.
Because they spend less on capital investments, labor costs, and R&D than competitors in Europe, Mr. Koller claimed that Chinese EV manufacturers can produce their vehicles for less money.
China’s automakers as well as international manufacturers like Tesla are rushing to increase shipments to Europe because the continent is largely open to importing Chinese cars.
The perception that Chinese products are of lower quality is dispelled by the fact that they have received five-star safety ratings from European regulators.
According to French automotive consultancy Inovev, China has a 5.8% market share of EVs in Europe. Inovev forecasts a sharp increase in the following years as Chinese brands produce more affordable models.
Contrarily, the US’s high import taxes on Chinese-made cars have so far effectively reduced China’s market share in the US.
Mr. Koller stated that the outlook for global vehicle demand in 2023 is uncertain.
An end to the war in Ukraine would lift prospects, but a deeper, protracted conflict could create a “far darker” scenario.
According to Mr. Koller, Forvia will increase its investments in the US, in part to benefit from the federal incentives made available by the Inflation Reduction Act, which was signed into law in August.
Forvia sees opportunities in offering fuel cell technology for pick-up trucks in North America, and Mr. Koller stated he anticipates a fuel cell pick-up to be introduced in the US by 2025.
The company has invested in Symbio, a company that develops fuel-cell technology, and Stellantis, the company that owns the Ram pickup truck brand, revealed last month that it was in talks to make an investment in Symbio as well.
According to Mr. Koller, Forvia is on track to achieve its objectives of increasing revenue to EUR 30 billion by 2025 and selling EUR 1 billion of assets this year.
Despite not holding 18% of the shares in Hella, it can still carry out its asset sales and cost-cutting measures.
Elliott Management, an activist hedge fund, owns 10.75% of Hella.
Given Forvia’s current debt, Mr. Koller stated that he is not in a rush to purchase the remaining Hella shares.