An unreasonable start –‘luxury’ electric cars

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The concept of electric car is welcomed by many common people in China, mostly owing to the low charging cost, they believe electric car should be a cheap vehicle for everyone, however electric cars have so far been ridiculed by the launch price. BYD e6 is priced at 369,800 RMB (€43.9k), while Chevrolet Volt is priced at 498,000 RMB (€59.1k) –more expensive than a Mercedes-Benz C 200 and E 200 respectively.

Taking electric scooters into consideration, electric vehicle is not a new concept for Chinese people. In fact, there are 120 million electric scooters powered by cheap lead-acid batteries in this country, more than the quantity of automobiles. Electric scooters are positioned between cars and bicycles in the market, priced around 2,000 RMB (€238). The charging cost is negligibly low. When the consumers become richer, they would like to pay more thousands of RMB to buy another two wheels. In a word, they hope electric car will position between electric scooter and conventional car, but it has not yet done so.

Accepted the reality of electric car’s high price, many people still are seeking the lower charging cost that can compensate the higher price. But the last hope has been squashed. We can make a brief calculation. Assume that Old Mr. Li has paid 498,000 RMB (€59.1k) for a Volt, while Mr. Wang has paid 185,800 RMB (€22.1k) for a Honda Civic. For Wang’s Civic, the annual cost of fuel consumption, maintenance, tax, insurance is unlikely to exceed 20,000 RMB (€2.4k) in the presentcase. Ten years later, the total cost of a Civic ownership is about 385,800 RMB (€45.8k). However, even if Li need not pay anything for his Volt during the ten years, its total cost of ownership is still much higher than the Civic. Yes, we ignored the fuel price may increase in the coming decade, but Volt’s charging and battery replacement are also be ignored.

General Motors priced Volt very high on purpose. Volt is priced at $41,000 (261.8k RMB, €31.1k)in the US, but when it came to China, where import tariff rate is 25%, its price increased 90%. The amazing price can be attributed to nothing but a marketing measure. GM uses the high price to reflect Volt’s leading high-tech sense, so does BYD, and maybe Nissan, BMW, Daimler in the future. Most BYD conventional cars are priced below 100,000 RMB (€11.8k), how can the e6 increase to 369,800 RMB (€43.9k)? The battery cost should not approach 270,000 RMB (€32.1k).

Electric cars are becoming a luxury item in China, with following 2 typical features. First, the price is very high and will never be compensated. Second, the price is much higher than its manufacturing cost.

A contradiction appears. Government generalizes electric cars very hard. Consumers desire cheap vehicles eagerly, but car manufacturers are building a new luxury market for electric cars, they are running at two different goals which is only likely to result in harm for the manufacturer when perceived sales goals are not reached.