VW Group Boss Rings Alarm Bells About State Of EV Market

Jul. 09, 2023 11:22 AM ET byKarl Furlong Industry News /11 Comments

He was highly critical of recent price cuts and "unhealthy market competition."

While casual observers may assume that the rise of electric vehicles can only be a good thing for the environment and consumers, Ralf Brandstatter, the CEO of the Volkswagen Group's operations in China, has expressed numerous concerns about the EV market's current rapid upward trajectory. Brandstatter was speaking at the 2023 China Automobile Forum in Shanghai when he expressed concerns over issues that will ultimately be to the detriment of the consumer.

"Currently, there are more than 120 car makers within the [EV] market, and about 150 new models will be launched in 2023," he said, according toAutocar. "Intense market competition and high battery prices make them face severe economic pressure. Short-term sales success requires extremely high capital investment. We are facing a situation where the market is overheating. Consolidation of the playing field is in full swing."

CarBuzz

Brandstatter said that EV startups are under financial strain, with many either having left the market or on the verge of doing so. Consider the ongoing struggles of Lordstown with its Endurance pickup; the Ohio-based company suspended production of the truck earlier this year due to the high cost of producing it as well as quality issues. Itspartnership with Foxconn was under strain, and it recently filed for bankruptcy and sued its own partner, reportsReuters.

The VW China boss was also highly critical of recent EV discounts in China. "The fierce competition has led to deep price discounts in recent months," said Brandstatter. "This will ultimately harm the interests of consumers. They will no longer be able to get services from retired brands, or they will see a significant price cut on models they buy." That affects residual values.

It's no secret that these specific comments were leveled at Tesla, since the EV giant spurred on a price war by drastically dropping prices across its lineup at the start of 2023.

CarBuzz

大众集团首席执行官,奥利弗·布鲁姆说很快that the German automakerwould not partakein the EV price war back in January, andID.4crossover prices haven't seen the same dramatic drop as those for the Tesla Model Y. Brandstatter has echoed these sentiments.

"For us, the profitability of the business is the most important," said Brandstatter. "We will not engage in unhealthy market competition in order to achieve short-term delivery growth."

That may be the case for Volkswagen, but right now, it's impossible to look past Tesla'sskyrocketing sales in the second quarterof this year following its price cuts. For VW, it will continue focusing on the admittedly shrinking internal combustion engine market, as it still delivers considerable cost advantages for the brand.

Volkswagen

Brandstatter also emphasized VW's focus on hybrid technology, including plug-in hybrids, a stance that has long been held by another automotive giant, Toyota.

It will be interesting to see how automakers balance the continued profitability of ICE cars with mushrooming EV lineups and whether or not they choose to rein in some of their bolder predictions about when an electric-only range is likely. Reports have already emerged that Mercedes is planning toslow down its EV transition, so Volkswagen and Toyota are not alone in approaching this era with more caution.

In the short term, price cuts and aggressive competition seem good, but the long-term effects are less so, especially for early EV adopters.