Can somebody briefly explain the subsidies (if they exist) for BEV in China? For me, it seems difficult to explain so dramatic price difference between the EU and China markets without them.
The big subsidies ended last year. What remains is 100% tax exemption for BEV and occasional regional subsidies for $1,000-2,000, but neither get to be written as MSRP.
This simulator may help you get an idea on how cheap an EV can get by manufacturing in and sourcing from China. As usual, it’s cheaper land, logistics, storage, energy, labor, plus the unparalleled economy of scale AND extremely fierce competition working here.
People can bury head in sand believing it’s “just cheap labor, IP theft and cutting corners”. Well, the deeper they’re entrenched in the idea, the further they’ll be left behind.
Actually BEV is not exempt from VAT, which is included in the MRSP. The tax exemption that BEV got is purchase tax (10%), which is not included in the list price, ICE vehicle got half exemption (i.e. ICE purchaser has to pay 5% purchase tax), to boost car sales.
The main reason for lower price is mainly due to lower manufacturing cost (economy of scale, robust supply chain), and other factors like fierce competition forces manufacturers to sell vehicles at price barely covers cost contribute as well.
So Tesla separately designs and builds a less safe Model 3 and Y for the Chinese market? And VW separately designs and builds a less safe ID3/4/6/7 for the Chinese market? And Kia separately designs and builds a less safe EV5 for the Chinese market? And Toyota separately designs and builds a less safe bZ4X for the Chinese market… and so on and so forth? Because ALL of those models cost significantly less in the Chinese market compared to western markets.
The same BYD factory pumps out a bunch of Seals which start at the equivalent of $27k USD for the ones sold in China, $32k USD for the ones sold in Australia, $36k USD for the ones sold in Thailand, and $48k USD for the ones sold in Germany, which means the Chinese Seals are the least safe, Australian Seals are slightly more safe, but not as safe as the Thailand Seals, and only the German bound Seals get all the safety features?
Yes they ALL do this. It’s cheaper to use lower quality steel, not care about crumple zones and not install non-mandatory safety equipment them doing it. Manufacturers only do the minimum required by regulators.
You can easily see the difference between the BYD Dolphin sold in China with the version for Europe in the size of their bumpers.
Ofcourse this does not explain everything, it is one of the factors only.
Yet the cheapo BYD Dolphin they are selling in Australia received better adult, child, AND pedestrian crash ratings than the brand new BMW X1 which costs more than 50% more…
I guess BMW must also be putting in low quality steel and taking out the crumple zones for their cars destined for down under.
In the EU these advanced systems have to be fitted in all new vehicles since 2022: intelligent speed assistance; alcohol interlock installation facilitation; driver drowsiness and attention warning; advanced driver distraction warning; emergency stop signal; reversing detection; and event data recorder (“black box”).
This increases the price of vehicles that are sold in the EU because including all that, increases the price of a vehicle without those systems.
Just when I thought that China haters had exhausted their specious arguments, another one pops up.
The software in an Xpeng or Huawei car is miles more advanced than the equivalent Tesla or BMW. They have 9 lidar sensors in the most recent Huawei. How many does the Tesla have?
Dude, I am not a China hater. I am just saying that the EU requires a certain number of paint systems to be installed in all vehicles and this contributed to increased prices. My EV was manufactured in China. Jeez.
Nevertheless, those are different requirements that require changes in production lines and components for a smaller number of vehicles meaning lower economies of scale and less advantageous supplier contracts.
That’s true. It also leads to driver assistance systems that are overly intrusive, which pass in the structured EuroNCAP test, but are unusable and almost dangerous on the road in poor visibility. Like was the case on the early MG4s. As they tried desperately to get a 5 star rating in Europe.
Can somebody briefly explain the subsidies (if they exist) for BEV in China? For me, it seems difficult to explain so dramatic price difference between the EU and China markets without them.
The big subsidies ended last year. What remains is 100% tax exemption for BEV and occasional regional subsidies for $1,000-2,000, but neither get to be written as MSRP.
This simulator may help you get an idea on how cheap an EV can get by manufacturing in and sourcing from China. As usual, it’s cheaper land, logistics, storage, energy, labor, plus the unparalleled economy of scale AND extremely fierce competition working here.
People can bury head in sand believing it’s “just cheap labor, IP theft and cutting corners”. Well, the deeper they’re entrenched in the idea, the further they’ll be left behind.
Actually BEV is not exempt from VAT, which is included in the MRSP. The tax exemption that BEV got is purchase tax (10%), which is not included in the list price, ICE vehicle got half exemption (i.e. ICE purchaser has to pay 5% purchase tax), to boost car sales.
The main reason for lower price is mainly due to lower manufacturing cost (economy of scale, robust supply chain), and other factors like fierce competition forces manufacturers to sell vehicles at price barely covers cost contribute as well.
Wow, that VAT tax exemption is huge.
The safety regulations in China are much more lax. Since they don’t need to comply to such stringent regulations the car is cheaper.
Is that really it? Do they build the cars there?
It’s one of the reasons, but not the only one.
So Tesla separately designs and builds a less safe Model 3 and Y for the Chinese market? And VW separately designs and builds a less safe ID3/4/6/7 for the Chinese market? And Kia separately designs and builds a less safe EV5 for the Chinese market? And Toyota separately designs and builds a less safe bZ4X for the Chinese market… and so on and so forth? Because ALL of those models cost significantly less in the Chinese market compared to western markets.
The same BYD factory pumps out a bunch of Seals which start at the equivalent of $27k USD for the ones sold in China, $32k USD for the ones sold in Australia, $36k USD for the ones sold in Thailand, and $48k USD for the ones sold in Germany, which means the Chinese Seals are the least safe, Australian Seals are slightly more safe, but not as safe as the Thailand Seals, and only the German bound Seals get all the safety features?
Yes they ALL do this. It’s cheaper to use lower quality steel, not care about crumple zones and not install non-mandatory safety equipment them doing it. Manufacturers only do the minimum required by regulators.
You can easily see the difference between the BYD Dolphin sold in China with the version for Europe in the size of their bumpers.
Ofcourse this does not explain everything, it is one of the factors only.
Yet the cheapo BYD Dolphin they are selling in Australia received better adult, child, AND pedestrian crash ratings than the brand new BMW X1 which costs more than 50% more…
I guess BMW must also be putting in low quality steel and taking out the crumple zones for their cars destined for down under.
This is not just about crash tests.
In the EU these advanced systems have to be fitted in all new vehicles since 2022: intelligent speed assistance; alcohol interlock installation facilitation; driver drowsiness and attention warning; advanced driver distraction warning; emergency stop signal; reversing detection; and event data recorder (“black box”).
This increases the price of vehicles that are sold in the EU because including all that, increases the price of a vehicle without those systems.
Just when I thought that China haters had exhausted their specious arguments, another one pops up.
The software in an Xpeng or Huawei car is miles more advanced than the equivalent Tesla or BMW. They have 9 lidar sensors in the most recent Huawei. How many does the Tesla have?
Dude, I am not a China hater. I am just saying that the EU requires a certain number of paint systems to be installed in all vehicles and this contributed to increased prices. My EV was manufactured in China. Jeez.
The size and shape of the bumper is to do with pedestrian safety, which is prioritised more in the EU NCAP rating.
The cost is still higher though.
The minimum standards are lower, but in practice, the tests are very similar and the cars are also almost identical.
Here the Chinese ID3 crash test.
https://youtu.be/mU3rAYAQAfw?si=EsGLIKLyjvzxUlEl
EU ID.3 crash test
https://youtu.be/0P7M8PvG0Pc?si=2-p2pA8nKGelk1l8
The test procedures are conducted at the same speed, the only difference is in the calculation of stars.
Nevertheless, those are different requirements that require changes in production lines and components for a smaller number of vehicles meaning lower economies of scale and less advantageous supplier contracts.
That’s true. It also leads to driver assistance systems that are overly intrusive, which pass in the structured EuroNCAP test, but are unusable and almost dangerous on the road in poor visibility. Like was the case on the early MG4s. As they tried desperately to get a 5 star rating in Europe.