Global EV Price War Looms as US and China Compete for Market Dominance

24 Jun 2024

The electric vehicle (EV) market is heating up in the global arena with the US and China gearing up for yet another price war. While US car giants are slashing prices, China is negotiating hard to set up shop in Europe. In fact, the pending EV competition in Europe could mean job losses in the future.

According to the International Energy Agency, environmentally speaking, 2030 will be a substantial year, because the world fossil fuel demand will peak by then as a larger number of EVs hit the road and the Chinese economy leans towards cleaner energy. Meanwhile, the debate about how effective EVs will actually be still continues.

Last year, US automaker General Motors launched its luxury electric Cadillac Lyriq in France, an expansion of its market in Europe after returning last year and a test of whether online-only sales will attract wealthy car buyers.

In the US, last year, Tesla slashed prices on its two most expensive EVs, after Tesla Chairman and CEO, Elon Musk realized that price cuts on other models had upped demand. The price cuts, one of many adjustments last year, ranged from 4% to 9%. In December, Musk unveiled Tesla’s new electric Semi truck, looking to reduce highway emissions with a battery power three times that of its diesel counterparts.

Car companies are exploring all fronts to catch the consumer’s attention, leading to another price war between two super economies

And it’s not just car makers who are into EVs. Foxconn, the largest electronics manufacturer and the supplier of Appletook to producing EVs last year. Chip giant NVIDIA is helping them in their pursuit, alongside developing automated and autonomous vehicle platforms. Big tech is yet to fully enter this arena though. In February though, Apple canceled work on its electric car, according to Reuters, a decade after the tech giant started the project.

Powerful partnerships are forming too. Honda and General Motors are planning to jointly develop affordable EVs.

Hybrids & More

Car companies are trying to sell more than just EVs as an environment-friendly solution by targeting tougher emissions standards. For example, in May, Toyota showcased next-generation engines for use in cars like hybrids and those running on biofuel. Volkswagen announced plans to cut down spend on combustion engines from 2025. It is working toward a target of 50% EV sales globally by 2030.

Hybrid car models are likely to flood the market in the coming year. Fiat owner Stellantis is likely to announce a hybrid version of its 500e small electric car to be produced at its Mirafiori plant in Italy. In May, China’s Geely talked about launching a series of hybrid models in the first half of next year, which will boast of its next-generation, more fuel-efficient engine.

Chinese are Gearing Up with EV

China has been buckling down to make it even bigger than it is in the global EV market. Last June, China introduced a 520 billion yuan ($72.3 billion) package to increase EV sales and other green cars in the coming four years.

Meanwhile, the debate about how effective EVs will actually be, still continues

Chinese EV makers have been concentrating on competing with the US. Chinese EV maker Nio has made a deal with Chinese EV giant BYD as a source for its batteries. According to reports, Nio aims to compete with Tesla. A made-in-China EV is also expected to enter the US market this summer offering power and efficiency similar to the Tesla Model Y, but for about US$8,000 less. US carmakers could face stiff competition from China, looking at the EX30 from Volvo, the Swedish luxury brand owned by China’s Geely.

Volvo Cars announced in February that it’s getting ready to convert to electric all its mainstay models, i.e., three SUVs and two sedans. The auto giant is also set to unveil a luxury electric van to improve sales in Asia. In March, BYD launched a new version of its Destroyer 07 hybrid car at a starting price that’s 11.3% lower than its predecessor, according to Reuters.

Europe, a Veritable EV Playground

Many events are coming into play on the European EV playground, and China is moving fast.

The country is getting ready to make a deal with Europe as EV tariffs loom. In September, Beijing criticized a probe launched by the European Commission into China’s electric car subsidies as protectionist and warned it would damage relations. Ursula von der Leyen, President of the European Commission announced the investigation saying markets were getting flooded with EVs that had artificially low prices because of state subsidies.

In fact, Stellantis is ready for a competition with Chinese rivals in the European market for EVs, which can be a harbinger of consequences for jobs and production according to the group’s Chief Executive Carlos Tavares as reported by Reuters. Already, last February, Ford announced axing one in nine jobs in product development and administration across Europe as it competes in the EV market. The US automaker announced plans to invest US$3.5 billion to build an EV battery plant in Michigan with Chinese partner CATL.

Will This Price War Benefit the Consumer?

Part of the charm of owning an EV is not just the environmental friendliness but also style and luxury, one of the prime reasons for EV adoption. Car companies are exploring all fronts to catch the consumer’s attention, leading to another price war between two super economies. This war of the EV makers could bring EV prices down globally. But it also means job cuts. The semiconductor chip war has already caused tumult. It remains to be seen how far it goes this time.

Navanwita Bora Sachdev, Editor, The Tech Panda