German electric cars are slow sellers in China.
And it should stay that way.
The problem is homemade, says a senior Mercedes insider.
This text is available
to IPPEN.MEDIA
as part of a cooperation with the
China.Table Professional Briefing -
China.Table
first published it
on March 16, 2023.
Beijing – German automakers are increasingly playing the role of spectators in the Chinese auto market.
In the booming market for electric cars, Volkswagen has a market share of just 2.4 percent.
BMW and Mercedes even under one percent, as figures from the state car insurance show.
The problem is homegrown, a senior Mercedes insider told
Table.Media
.
In the long term, the joint ventures with competitors from the People's Republic were a mistake and the technical lead of Chinese manufacturers in e-mobility can no longer be made up.
For a long time, German automobile manufacturers only had access to the Chinese market if they entered into a joint venture with a partner from the People's Republic.
Although this allowed the vehicles to be sold in the largest market in the world, it also led to an enormous transfer of knowledge.
The automakers don't deny that either.
“As is well known, the founding of joint ventures was mandatory in China until a few years ago – as was the development of certain central components in the country.
Of course, this meant that development and manufacturing know-how flowed to China,” a BMW spokeswoman told
Table.Media
.
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German car manufacturers in China: joint ventures are becoming a boomerang
A Volkswagen spokesman is correspondingly positive about the abolition of the joint venture obligation at the beginning of last year: "We welcome the further opening of the Chinese automobile market, which enables foreign companies not only to operate component plants independently, but also to set up their own vehicle production.
We are convinced that a level playing field is the key to further positive development of the Chinese automotive industry.”
The question is whether the step comes too late.
Chinese manufacturers produce vehicles that are hardly inferior to German models.
The electric car boom makes it clear that they have even built up an enormous lead in some areas.
For example, in software integration, driving assistants and autonomous driving.
In January 2023, for example, Mercedes announced that it was the first manufacturer to receive Level 3 certification for US road traffic in the state of Nevada.
In Shenzhen, Chinese vehicles have long been collecting test kilometers at level 5.
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E-Cars: Do Customers Want It Cheap or Advanced?
When asked about the technical advances, a company spokeswoman for BMW asked the counter question: "Where do you see the competition on an equal footing?" She points out that the Chinese market is a volume market and customers are very price-sensitive.
Mercedes also emphasized to
Table.Media
that they primarily rely on premium products.
"The electric vehicle segment in China is still at the beginning of a promising development, especially for cars priced over one million renminbi." That's around 100,000 euros.
"The greatest growth in the electric vehicle segment in China is currently taking place in the price segment around 300,000 renminbi." Mercedes sees its opportunity in the top-end area of electric cars.
But even in the low-cost range, there are techniques that are far from common with premium manufacturers.
The small electric car Dolphin from BYD (equivalent to 14,000 euros) has an 800-volt electrical system.
A technology that is becoming the new standard in China.
The German competitors only have them in the Porsche Taycan and Audi E-Tron GT.
German manufacturers can hardly catch up in China
Officially, the German providers reject the risks.
"We are on the long-term and strategically on our way, short-term developments are noticed and analyzed.
From our point of view, there is currently no discernible risk, ”said the BMW spokeswoman.
An opinion that sees the Mercedes insider skeptical.
“The transfer of knowledge was foolish.
In the long term, the German manufacturers have dug their own grave with it.” Because he does not believe that the German manufacturers will catch up successfully.
“They are light years ahead of us in taking into account the habits and wishes of customers.
We are trapped in regulations and processes.” Chinese manufacturers would implement customer requests immediately.
An example is the sleeper function.
The car places the seats horizontally, the car heats up and filters the air.
Chinese customers could then sleep in the car for a short 30 minutes during their lunch break.
Although it is no more than linking existing technologies, German manufacturers in China have to go through months of internal coordination processes.
Chinese OEMs simply implement something like this.
+
In China, the market for electric cars is booming.
However, German models are less in demand.
© N. Bruckmann/Midjourney*
VW wants to become more dynamic in China
Volkswagen reacted by setting up new structures.
"The central element of the reorganization is a regional China Board headed by Ralf Brandstätter, Volkswagen Group Board Member for China, which makes the key decisions in the region across brands and in close cooperation with the joint venture companies," said the VW spokesman.
Volkswagen calls its strategy “in China, for China”.
Meanwhile, the group is slowly but surely leaving traditional paths in this country.
The "cars for the people" are becoming more and more expensive.
VW placed a lot of hope in Cariad's partnership with Horizon Robotics, one of the leading providers of computing platforms for smart vehicles.
This will accelerate the "regional development of driver assistance systems (ADAS) and autonomous driving systems (AD) for the Chinese market."
However, experts have long doubted the benefits of these efforts – at least for the German economy.
When asked about this, a BMW spokeswoman told
Table.Media
: “The Chinese market is the strongest for the BMW Group and we see further potential.
Our local production for the domestic market also secures jobs in Germany.” Although external observers also see the growth potential, they doubt that business with China will secure jobs in Germany.
According to a study by the China research institute Merics, the economy of the People's Republic has long benefited significantly more from the investments than the German economy.
*This image was created with machine assistance. A language model was used for this, which processes information from selected sources. Selection of the sources and language model requests as well as final processing of the image: Art Director Nicolas Bruckmann.
List of rubrics: © N. Bruckmann/Midjourney*
