"Not Porsche but BYD"... German 'Big 3' Shaken by Chinese Electric Cars

Volkswagen, BMW, Mercedes-Benz and Other German Big 3
Lagging in Electric Vehicle Transition, Poor Performance in China

Germany's leading 'Big 3' automobile manufacturers are struggling to compete with Chinese electric vehicle companies. It is assessed that the traditional selling points these Big 3 have emphasized, such as engine power and ride comfort, are insufficient to turn back Chinese consumers moving toward electric vehicles.

Bloomberg reported on the 15th (local time) that "Volkswagen, BMW, and Mercedes-Benz, Germany's three major automakers, which have fallen behind in technological trends, are struggling to regain competitiveness in China, the largest and most profitable market," and shared the case of a customer who turned away disappointed from these three companies' products.

[Image source=AFP Yonhap News]

Ryan Xu, a businessman living in Guangdong Province, China, is a German car enthusiast who owns a Porsche 911, Mercedes-Benz G-Class, and Porsche Taycan, but recently sold his Porsche Taycan and switched to the Chinese electric vehicle Nio ET5. Compared to the Mercedes-Benz EQE, which was another option he considered, the ET5 offered a more luxurious interior and smoother voice control features at about 33% lower price.

Xu said, "The Taycan's software system was terrible. It was nothing more than an electrified Porsche," and evaluated, "Mercedes-Benz, BMW, and Audi can no longer be considered luxury cars." Bloomberg diagnosed that "Chinese consumers increasingly prefer the technological improvements offered by electric vehicles over traditional selling points like horsepower and handling."

The weakening position of the German Big 3 is also confirmed by numbers. In the third quarter, sales in China for Mercedes-Benz, Volkswagen, and BMW plummeted by 13%, 15%, and 30% respectively compared to the same period last year. Especially for Porsche, a Volkswagen subsidiary, global demand for the electric vehicle model Taycan dropped by nearly half, resulting in a 19% decrease in sales. Porsche recorded its worst third-quarter performance in 10 years, and BMW in 4 years.

Marco Schwert, Volkswagen's head of sales, conveyed the atmosphere, saying, "The competitive situation in China is particularly fierce." Steven Dyer, managing director at AlixPartners, pointed out, "The German Big 3 are at a crossroads," adding, "Their market strategies require dramatic changes." Currently, German automakers' market share in China is about 15%, significantly down from 25% before the pandemic. Especially, their electric vehicle market share is below 10%, a low level.

Bloomberg pointed out, "German car manufacturers, who dominated in the era of high fuel consumption, underestimated the threat from new competitors and were reluctant to give up the profits generated by internal combustion engines," adding, "Now, the Chinese electric vehicle companies they must face as challengers are showcasing the latest technologies at the Paris Motor Show, Europe's largest auto exhibition, and advancing aggressively."

The New York Times (NYT) emphasized, "At the Paris Motor Show, which determines Europe's top automakers, the products that attracted the most visitors were Chinese electric vehicle models such as BYD, Leapmotor, and Xiaopeng," and "Despite the recent decision by the European Union (EU) to impose anti-subsidy tariffs on Chinese electric vehicles, the number of cutting-edge electric vehicle models launched by Chinese companies at this motor show was the highest ever."

Earlier, the EU approved a plan to impose additional anti-subsidy tariffs targeting Chinese electric vehicles, which have been conducting low-price offensives based on excessive subsidies, with tariffs up to 45.3%. If negotiations are not concluded by the 30th of this month, the tariffs will take effect from the 31st and be applied for five years.