Europeans, Worried By China ElectricThreat, Must Be Spooked By Tesla Mass Market Hint

Europeans are struggling in the race to invent the affordable electric car and are being threatened by the Chinese from above and below, and if that’s not enough bad news, Tesla

TSLA
might be gearing up to move down-market and become an existential threat also.

European car buyers are already flocking to buy the MG ZS EV. This compact battery-electric vehicle (BEV) SUV is priced at about $38,000 (after tax) and represents great value at least compared with Europe’s inflated prices. The ZS is made in China by SAIC Motor so don’t be fooled by the MG moniker. This price point is about average for bottom of the range electric cars here.

Just look at the price of a little MINI E city car, and you’ll see the big opportunity Tesla sees in Europe. The cheapest electric MINI costs about $37,300 in Britain and the lowest priced Tesla Model 3 in Europe costs $43,000.

Admittedly, buyers in Britain would then have a government handout of $4,000, and the cheap Model 3 is only available in Iceland because there is no sales tax on electric cars there, and the import tax is currently waived, but when you look at the two cars and compare, there is a massive difference in capability, suggesting the Tesla should cost maybe more than twice as much as the MINI, owned by BMW. One is a utilitarian city car, admittedly with some flourish, but has limited ability. The Model 3 is a fully fledged, all-round luxury car.

The MINI E is very small, with a rear space that is really only an empty gesture. It has a battery with a claimed capacity of 145 miles on a very good day but in reality closer to 100 miles, while the bottom of the range Model 3 can travel a claimed 263 miles. It has four-seats and plenty of room to stretch out and a proper trunk as well as a frunk. It goes so well it takes sales from top of the range BMW 3 series rocket ships.

So imagine the horror for Europe’s electric car makers when CEO Elon Musk let slip Tuesday he was thinking about launching a cheaper Tesla here. Tesla has taken the premium end of the sedan and SUV market by storm, biting a big chunk out of the likes of BMW, Mercedes, Audi and Porsches most potent profit streams.

“In Europe, it would make sense to do a compact car, perhaps a hatchback,” Musk was reported as saying at an event in Germany, by Automotive News Europe.

Musk has already talked about a cheaper Tesla in the U.S. with a plan to build a $25,000 (before tax) version within 3 years.

Meanwhile, European car makers must make hay while the sun shines. They must maximize sales and profits from their more limited machines, before the competition tightens.

According to French consultancy Inovev, BMW plans to sell 50,000 electric MINIs globally. In the first 9 months of 2020 it sold 7,960 electric MINI Es in Europe, up from 173 in the previous year of its launch. That compares with 62,114 electric Renault Zoes in the first 9 months in this so-called affordable sector, and market leader. In 2^nd place was the Peugeot 208e (20,887) and the BMW i3 (14,388). The MINI E’s closest competitor in this sector, the Honda e, sold only 1,371, no surprise considering its huge price, small size, and limited battery range similar to the MINI E.

Tesla sold 55,300 Model 3s in Europe in 2020, down from 62,900 in 2019, according to Berlin-based auto analyst Matt Schmidt (http://schmidtmatthias.de ).

The average selling price of a Model 3 was maybe 3 times that of a Renault Zoe.

Why does the specification of the MINI E look so poor?

Schmidt said BMW produces the MINI E more to help it meet European Union (EU) CO2 emission regulations.

“The MINI E is to some extent a compliance car, which is there to help BMW Group meet CO2 rules in Europe, and CAFE rules in California,” Schmidt said. In the U.S. the MINI E starts at $29,900 (before sales tax) but gets down to an effective just under $20,000 after the federal tax credit of $7,500 and state incentives.

“The price and impracticality of the MINI (in Europe) makes it more or less a ‘second car’ only option, but this makes sense for BMW Group as a business model helping it avoid fines for missing compliance targets with this unlikely unprofitable vehicle while not diluting the profitable BMW brand with a green shade of unprofitable e-mobility,” Schmidt said.

While carmakers can’t seem to make an affordably priced vehicle for the European market, China is attacking the premium end with its Polestar 1 and Polestar 2 and readying an assault on the cheap and cheerful urban runabout segment.

Polestar is a subsidiary of Sweden’s Volvo, which in turn is owned by Zhejiang Geely Holding of China.

David Bailey, Professor of Business Economics at the Birmingham Business School, commenting on the lower end market threat from Chinese carmakers, said Europeans must gear up to meet this threat.

“European makers certainly need to embrace this niche or face being wiped out in this segment by super low-cost Chinese brands when the latter can meet European crash safety standards,” Bailey said. 

“Think of cars like the best-selling EV in China, the funky looking Hong Guang Mini, or a range of models made by BYD. The point is that the Chinese are coming and the European industry had better shape up fast, especially in terms of cheap EV run arounds for towns and cities,” Bailey said.

Hong Guang MINI EV, is a two-door micro electric vehicle launched by a joint venture between General Motors GM

GM
and SAIC and sells for about $4,100 after tax.

The little Citroen Ami may be able to fight off the Chinese from below, but after Musk’s musings, the Tesla threat from above could be devastating for Europe.

WintonsworldMINI Electric Level 2 review – Wintonsworld