The price difference between Europe and China for new energy vehicles has been exaggerated to the level of luxury products in the Chinese and American markets, and almost all product lines are covered.
Text: "Autobots" Meng Hua.
Volkswagen may not have expected to spark a lot of buzz in China before taking legal action against a local dealership. The lawsuit has been going on for more than 50 days, and the local court has yet to reach a verdict. However, Volkswagen's intention to get rid of it quickly is still obvious.
Strictly block "unauthorized imports".
A car company called "Gregory Brudney" imported 22 ID. from China6 crozz for sale in Germany.
Although the car is only produced in China, Volkswagen has officially introduced it to Germany, and the terminal retail price is as high as 80,000 euros. The car is priced at 260,000 yuan (about 3.) in China360,000 euros), which is only 42% of the terminal price in Germany.
If the way that this dealer can find a way, plus various logistics warehousing and taxes, it is also very profitable, at least more than the official authorized store.
The car itself is compliant with European standards, but certification is required. Theoretically, it is impossible for dealers to obtain the required information for Shanghai Volkswagen authorization and Damao certification. Obviously, this dealer went through the bicycle certification procedure. This is equivalent to what we often call parallel import business. Regardless of the details of regulation and taxation, the common denominator between them is that they are not authorized by the owner of the intellectual property right (i.e., the brand owner).
We don't know how much the dealer paid for the certification of the bikes in Germany, but the new cars have been seized in the court warehouse, and Volkswagen is demanding that the dealer bear the cost of destroying them at 15,000 euros each.
Regardless of whether the formalities and taxes were complied with, Volkswagen insisted on keeping them out of the German market. It's impossible to say that there isn't a little emotion in this. For Volkswagen, if this road is not blocked, it will lead to the collapse of its local sales of products (not just new energy).
It is understandable that Volkswagen is strongly advocating the most severe punishment for this bad dealer.
Historical inversion
However, the experience of the Chinese market for so many years tells us that as long as the price difference between the two markets of similar products is large enough, and the product itself is not a problem, then the unofficial authorized channels cannot be blocked, whether the latter is through legal or illegal channels.
And the higher the barriers (both tariffs and non-tariffs), just like the locks of the dam, raising the "water level difference" from the policy side.
The price gap between China and the United States for high-end fuel vehicles is not only caused by the Chinese market's perception of premium prices for specific high-end brand products, but also by the high profits of official importers. Obtaining an official authorization is like getting the right to print money. Parallel imports, on the other hand, at least partially hedge the profiteering business of these importers. As spreads gradually decline, it will be more difficult for both parallel importers and authorized importers to make the original profit margins.
After years of gambling, regulators have had to give legal status to parallel imports. Now it is the turn of the German regulators and the courts to face this problem.
Because the price difference between European and Chinese electric products has been exaggerated to the same level as the luxury products in the Chinese and American markets. The difference is that at the beginning, it was only a specific product of a certain brand, but now the price difference between Europe and China for new energy vehicles covers almost all product lines.
Interestingly, the price difference between China and Germany for domestic brands ranges from 30% to 168% (both are official channels), while the price difference between small cars is greater than that of medium and large luxury cars. Among multinational brands, whether it is German BBA+Volkswagen, or Nissan, Toyota, and Mazda, the price difference between China and Europe has reached 70%-117%. The exception is the Volvo C40, which has a spread of only 15%.
The reverse spread is the BMW i4 and Porsche Taycan, but neither of them is produced in China, and its cost does not depend on the Chinese ** chain.
Arbitrage space for parallel import requirements
It can be seen that whether it is a Chinese brand or a multinational brand, its production costs and pricing strategies must follow the local market. This has to do with the big picture of competition.
Obviously, China's electric vehicle competition is more active, technology replacement is faster, there are many entrepreneurial brands, and the atmosphere of the whole market is like a copper pot fried peas. Compared with China, competition in the European market is still tepid, and the main driving force for its progress is still regulatory and environmental protection. Most of the heavy assets from China have been blocked out, and the products that have come in through layers of barriers have also been very high, weakening the strategic urgency of European car companies.
Musk said at the earnings conference on January 25 that Chinese brands would take out most of the other car companies in the world if they didn't build barriers. Now there is a fair playing field, and that is the third-party market, such as Thailand and other Southeast Asian markets.
Tesla claims to be globally unified**, but given the complexity of the tax systems (not just tariffs) in each market, the spreads on its products are small but still exist. The Tesla Model 3 is priced at 230,000 yuan in China, 250,000 yuan in the United States, 300,000 yuan in Europe, and 400,000 yuan in Australia. To be honest, this price difference is only enough for the official to play, and it can't feed parallel importers, who require at least 70% of the price difference to have room for operation.
Differences in the cost of battery procurement
So, taking a step forward, what is the composition of the EV price gap between China and Europe?
Autobots argues that there is no standard in the world that can accurately quantify the difference in cost between the two. Not only because of the rapid changes in the cost system on the Chinese side, but also because of the procurement and the first chain, the two are affected by the cross-chain (cross-market procurement).
Moreover, the maritime logistics system is now extremely unstable, and BYD's first ro-ro ship, the Explorer 1 (7,000 standard positions), is said to be sailing around the Cape of Good Hope to Europe instead of the Red Sea and the Suez Canal. After all, carrying billions of dollars worth of electric vehicles, it is better to increase freight than to pass through the high risk of warring areas.
China's iron battery monomer concentration has dropped to 04 yuan or so wh (occasionally it falls to 0.)3 yuan wh, the head ** business ** slightly expensive). BMW asked SVOLT to deliver 90GWh batteries in Europe (in several years), with a value of 60 billion yuan. If you do this roughly, it's about 067 Wh.
It is easy to think that if BMW purchases Northvolt batteries, regardless of whether the latter has the ability to make them, even if the production capacity is fine, according to the same **, the purchase price will be as high as 1$5 wh.
This is also the reason why Hive was asked by Party A to build a factory in Europe. Moreover, what is required is a complete ** chain (including the material factory). This is obviously localized with the procurement traction chain. It is the same as what the Chinese did 20 years ago, except that Chinese ** companies have pushed up production capacity through hard work, and ** down, and European OEMs need to rely on Chinese ** companies all the time.
The cost difference is spread throughout the entire industry chain
Before the construction of the factory, there are environmental protection certifications and equipment certifications. According to industry insiders, the export of a winding equipment to Europe must be three or four times that of the domestic market in order to keep it from losing. Because EU certification is very cumbersome and expensive.
Even if the factory is successfully built, there will be a series of troubles in the future: worker efficiency, insufficient labor, insufficient professional resources, and upstream raw material procurement. Generally speaking, after the localization of the battery alone, it is considered **12 yuan wh, it will also lose money, and can only hope to tie after the expansion of production capacity.
In December 2022, CATL produced the first batch of battery cells in Thuringia, Germany, but it has not been able to supply them on a large scale because "the cost is too expensive and the production volume is not high". It is said that the plant is still losing money.
The problems encountered by batteries are typical, from before the formation of production capacity to after the formation of production capacity, the comprehensive cost of production in Germany is more than twice that of China. Of course, it is not so exaggerated to the whole vehicle, because the German car company has a complete vehicle process and organizational capabilities. It's just that their business transformation is too slow, and some important parts of electric vehicles still have to be purchased across the market.
Because of the large quantity and high value of the battery, it can be required to produce locally. As for lidar and other components, now China's leading manufacturers have made 96-line solid-state lidar 1 3 of similar foreign products. If the purchase volume is insufficient, it can only be imported, and it needs to face a tariff wall.
Labor costs are another big chunk. In the past, there was a lot of concern about the pay gap between employees. According to the data, the average annual salary of German employees is about 420,000 yuan; In 2023, the average annual wage of employees in China's urban non-private enterprises will be 106837 yuan. The former is 4 times more than the latter.
The problem is that the former is not as efficient as the latter. Once there is a problem in production, because of the card visa, the Chinese technicians cannot fly to the site immediately to deal with it, and the production line can only be stopped. This loss is difficult to calculate.
For example, most of the employees of the "coating machine" on the battery production line of Chinese enterprises are technical secondary school and college degrees, while European batteries have recruited a bunch of highly educated people to manage the same machines. Even so, when the people from the Chinese equipment factory leave, they can't even deal with simple problems. It's not just a matter of experience, it's a lack of "initiative" on the part of local employees.
How do you quantify the cost difference between the two? It can't be quantified at all. One thing is certain, though, as China's new energy scale and technology expansion continues to accelerate, European companies are being left farther behind and more difficult to catch up. In the past, the focus was on the technical differences of vehicle products, but in fact, the technical level of production line workers is also rapidly distancing, which worsens the relative cost disadvantage of European car companies.
All these factors are reflected in the whole vehicle, and the competitiveness of European car companies will fall further and further. The EU official can only sacrifice the best barriers, and the wall must be built higher at one time, so as not to increase the size repeatedly in small steps. As everyone knows, the higher the wall, the greater the arbitrage space for unauthorized imports.
Although Volkswagen is going to kill and cut very hard this time, this situation will only get worse in the future. If the game continues, either a framework of rules will be negotiated and parallel imports will be allowed; Either work hard yourself and fill the cost gap. Which path is more realistic, Europeans may already know. 【Copyright Notice】This article is the original manuscript of "Autobots", and it is not allowed to be unauthorized **.