Lower manufacturing costs in China

Electric vehicles made in China cost 35% less to produce than similar models in Europe, according to a report by AlixPartners. The study highlights the significant industrial advantage Chinese manufacturers have over their Western counterparts, with the average cost of producing an electric car in China at $20,000, compared to $31,000 in Europe.

Integrated battery supply chain

The cost difference is attributed to several factors, including a more integrated battery supply chain and lower energy prices in China. Chinese automakers have mastered the entire battery industry chain, whereas European manufacturers rely heavily on external suppliers for raw materials and have limited recycling capacity.

Efficient production methods

The report also notes that Chinese manufacturers benefit from a concept referred to as "China Speed," which involves streamlining decision-making processes and prioritizing virtual testing to rapidly integrate new technologies into their vehicles. This approach allows Chinese companies to develop and launch new models more quickly than their European counterparts.

Suggestions for European competitiveness

AlixPartners suggests that European countries should subsidize the establishment of battery factories and cover part of their energy costs to regain control over parts of the production chain. However, the report acknowledges that local access to raw materials remains a major challenge.

Tariffs may not be enough

Despite the imposition of tariffs by the European Union, which has typically been oriented toward free trade, the report warns that these measures only provide a temporary solution. Even if Chinese production relocates to Europe, reducing the advantage linked to local supply chains, the organizational efficiency of Chinese companies is expected to remain. Western manufacturers are urged to urgently reinvent their operational strategies to remain competitive and profitable.