Major European and American automakers are under intense pressure from their Chinese rivals to reduce the cost of electric vehicles in order to offer prices and profit margins that are comparable to those of fossil fuel versions, according to industry executives.

The increase of electric car sales has stalled, so Europe’s Stellantis and Renault are working to make EVs more accessible. Meanwhile, American giants General Motors and Ford have discussed the prospect of forming alliances that may reduce the cost of EVs.

The high price of EVs is now a major deterrent to the further, widespread use of zero-emission vehicles. Since Tesla is the top EV manufacturer in the US and Europe, automakers have found it difficult to compete, but now that Chinese versions are more affordable, the stakes are higher.

After Stellantis released its full-year financial results and issued a warning about an eventful year ahead, CEO Carlos Tavares told reporters, “If I were a short-termist, I could immediately increase my sales of electric vehicles simply by letting the margins slide.”

The entry of less expensive Chinese electric vehicles (EVs) has given European automakers further motivation to continue developing more reasonably priced variants. Automakers in the United States are concerned that BYD and other low-cost Chinese electric vehicle manufacturers are increasing their exports to Europe and other regions, and that these companies may build plants in Mexico to ship EVs to the US.

When asked about pricing and profitability, Renault CEO Luca de Meo responded to analysts, “Of course, everybody is trying to reduce the cost of EVs,” in order to achieve price parity with cars with combustion engines.

Speaking following Renault’s release of its 2023 findings, De Meo stated that while automakers can reduce the size of the battery pack, which accounts for about 40% of the cost of an EV, pricing will still be higher for cars with larger batteries.

Ford has established a dedicated team to build an affordable electric vehicle (EV) that might rival BYD, and the company is also assessing its battery strategy. “We are able to initiate a competitive battery scenario. We can switch to common cylindrical cells, which might significantly increase our purchasing power, stated CEO Jim Farley. “Maybe we should do (this) with another OEM (automaker).”

Automakers in the United States and Europe must perform a careful balancing act in order to lower the price of electric vehicles (EVs) while also reducing costs in order to generate the profits that investors desire.

Investors are pressuring Ford and GM to cut back on their EV investment; the former is predicted to lose $5 billion to $5.5 billion on EVs this year.

The new Citroen e-C3 SUV, which has a starting price of 23,300 euros ($25,015), was presented by the Stellantis brand in October of last year with the intention of competing with Chinese manufacturers in the low-cost EV market.

Tavares noted that the margins between its electric and fossil-fuel models “are converging” as a result of declining raw material costs for batteries, and he wants to quicken that process.

According to Stellantis’ Fiat website, the starting price of the Fiat 500 is 16,790 pounds ($21,066) in Britain, whereas the starting price of the electric e500 is 28,195 pounds.
The electric Scenic is scheduled for release this year, and according to Renault Chief Financial Officer Thierry Pieton, it will start at just under 40,000 euros ($42,944).

“If you look at the competition, including Chinese competition, Scenic is going to be very well positioned,” he said.

(Adapted from USNews.com)

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