Western car makers are fretting about an “invasion” of cheap Chinese electric cars in Europe, prompting France's Renault to say on Thursday it was aiming to slash production costs for its electric models by 40 per cent.
Finance chief Thierry Pieton said the best way to fend off price competition was for Renault to cut its own development and manufacturing costs.
While the targeted 40 per cent reduction is from 2027 onwards, chief executive Luca de Meo said the group would start seeing significantly lower production costs from the second half of this year, thanks to a fall in raw material costs.
“It's clear we are in competition and that time is of the essence, but that's the business we are in,” he said.
Delivering cheaper electric vehicles has become a priority for car makers worldwide as the shift to cleaner driving has come with high prices, due largely to battery costs.
Chinese manufacturers such as BYD and SAIC have invested heavily in the shift, using lower labour costs and local battery suppliers to get a head start over many rivals.
In 2022, Chinese car makers had a 9 per cent share of Europe's EV market, nearly double the previous year's figure, according to forecasts by consultancy Inovev. And the pace is picking up.
Like other EV makers, Renault also faces increased pressure from US rival Tesla, which has cut prices several times this year even as that has eaten into its margins.
As an example, Tesla this year cut US prices of its Model Y long-range version by a quarter to $50,490.
That is having an impact. According to researchers Jato Dynamics, Tesla and SAIC's MG were the biggest market share winners in Europe during the first half of this year.
Carlos Tavares, chief executive of Peugeot-to-Fiat car maker Stellantis, warned on Wednesday the competition with Chinese manufacturers would be “extremely brutal”.
“Their cost competitiveness is 25 per cent against us. We have to fight,” he said, describing the Chinese push as an “invasion”.
“We need to use our own costs to make sure that we keep on making profit with affordable prices for our middle classes.”
Mr Tavares said western car makers needed to use “the same weapons” as their Chinese rivals, sourcing parts in lower cost countries and striking partnerships with battery suppliers that offer the best combination of energy, cost and weight.
“It means that we need to come up with a sourcing proposal that allows us to sell those cars like the Citroen C3 at €25,000 or less in a profitable manner,” he said.
Once-dominant western car makers are also striving to regain ground in China itself, the world's largest car market, after losing share to local manufacturers.
Mercedes-Benz said on Thursday it was sticking to its strategy and would not engage in a price war to “buy” market share in China.
Asked about Volkswagen's move to build new models with Chinese partners and potentially co-create local platforms, Mercedes chief executive Ola Kaellenius said the premium car maker was working with partners in China to adapt its technological offering to local taste.
“We are not handing the task of creating the Mercedes of the future to another OEM [original equipment manufacturer] – that task stays with us,” Mr Kaellenius added.
Our legal advisor
Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.
Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation.
Education: Sagesse University, Beirut, Lebanon, in 2005.
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
A little about CVRL
Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.
One of its main goals is to provide permanent treatment solutions for veterinary related diseases.
The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.
UAE currency: the story behind the money in your pockets
Meydan race card
6.30pm: Baniyas (PA) Group 2 Dh125,000 (Dirt) 1,400m
7.05pm: Maiden (TB) Dh165,000 (D) 1,200m
7.40pm: Maiden (TB) Dh165,000 (D) 1,400m
8.15pm: Handicap (TB) Dh170,000 (D) 1,900m
8.50pm: Rated Conditions (TB) Dh240,000 (D) 1,600m
9.25pm: Handicap (TB) Dh175,000 (D)1,200m
10pm: Handicap (TB) Dh165,000 (D) 1,400m
Primera Liga fixtures (all times UAE: 4 GMT)
Friday
Real Sociedad v Villarreal (10.15pm)
Real Betis v Celta Vigo (midnight)
Saturday
Alaves v Barcelona (8.15pm)
Levante v Deportivo La Coruna (10.15pm)
Girona v Malaga (10.15pm)
Las Palmas v Atletico Madrid (12.15am)
Sunday
Espanyol v Leganes (8.15pm)
Eibar v Athletic Bilbao (8.15pm)
Getafe v Sevilla (10.15pm)
Real Madrid v Valencia (10.15pm)
'THE WORST THING YOU CAN EAT'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
Hili 2: Unesco World Heritage site
The site is part of the Hili archaeological park in Al Ain. Excavations there have proved the existence of the earliest known agricultural communities in modern-day UAE. Some date to the Bronze Age but Hili 2 is an Iron Age site. The Iron Age witnessed the development of the falaj, a network of channels that funnelled water from natural springs in the area. Wells allowed settlements to be established, but falaj meant they could grow and thrive. Unesco, the UN's cultural body, awarded Al Ain's sites - including Hili 2 - world heritage status in 2011. Now the most recent dig at the site has revealed even more about the skilled people that lived and worked there.
