Volkswagen Group China CEO Ralf Brandstaetter, who previously served as CEO of the Volkswagen Passenger Cars brand, has warned that the electric car market is “overheating.”
Speaking at the 2023 China Automobile Forum hosted by the China Association of Automobile Manufacturers in Shanghai, Brandstaetter said that high capital investment and discounting “will ultimately harm the interests of consumers,” according to Autocar.
“Currently, there are more than 120 car makers within the [electric vehicle] market, and about 150 new models will be launched in 2023. Intense market competition and high battery prices make them face severe economic pressure. Short-term sales success requires extremely high capital investment.”
He also noted that many EV startups face a financial squeeze and are exiting or about to exit the market, or are in urgent need of new capital investment.
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“We are facing a situation where the market is overheating. Consolidation of the playing field is in full swing,” the executive added. He was especially critical of the discounting of EVs in China.
“The fierce competition has led to deep price discounts in recent months. 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 the models they buy.”
The comments are clearly a reference to Tesla, which has started an EV price war in China in late 2022 – and not only in China. Brandstaetter stressed the Volkswagen Group would not chase sales and growth in China’s EV market at all costs as “the profitability of the business is the most important.”
“We will not engage in unhealthy market competition in order to achieve short-term delivery growth,” Brandstaetter said taking another jab at Tesla, which has cut prices many times this year to increase sales.
The executive also noted that Volkswagen Group would not abandon the internal combustion engine car market in China despite slowing sales. He said the carmaker would launch a total of 17 new ICE models in China by 2030, in addition to promoting the development of hybrid technology and “gradually transforming petrol models to plug-in hybrids.”
