BYD electric cars are also becoming increasingly popular in Europe. Picture Alliance
More and more electric cars are coming from China, which are more attractively priced compared to European vehicles.
But it is always cheaper: Chinese cars sometimes cost only half the price we pay for them here in their country of origin.
The price difference is partly explained by transportation and import costs, but that is far from the whole story.
There have been a lot of reports about Chinese electric cars recently. As European ports are flooded with Eastern EVs, the EU is investigating whether Chinese automakers have an unfair competitive position. It is not surprising that electronically powered vehicles are in such demand: technically, they are in no way inferior to European ones. They are also often better equipped – and cheaper.
But it’s even cheaper. In fact, Chinese automakers are offering their electric models in China itself for half or even a third of the price. This raises the question of why the same car costs around 15,000 euros in China while it is said to cost over 40,000 euros in Europe.
Let’s take the BYD Atto 3 for example. In China it costs just over 14,000 euros, in Germany it is worth a whopping 37,990 euros. A difference of almost 24,000 euros that is difficult to explain. A significant difference can also be seen with the manufacturer Nio. The EL6 (called ES6 in China), for example, costs 65,500 euros including a 75 kWh battery, but in China it only costs 43,500 euros. A difference of 22,000 euros.
It becomes even more remarkable when you compare these differences with the Tesla Model 3. It costs almost 41,000 euros in Germany, while in China it costs the equivalent of just under 30,000 euros. A gap of 11,000 euros: still a lot, but only half of what BYD manages.
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One of the Reuters news agency Commissioned research shows that this immense price difference is not only due to transport costs and import duties, which are now being called into question by the EU investigation. These costs are clearly added to the selling price of a car before it arrives in the showroom in this country.
The Chinese BYD Atto 3 is different from the European BYD Atto 3
There is another factor that affects the price difference. Many cars offered in Europe are usually slightly more equipped than their Chinese counterparts. Stricter security requirements apply in the EU, so other software and sensors are installed. In some cases, the European variants are also slightly larger and have different suspension, making the ride more in line with European expectations.
Even if you take into account all possible additional costs for selling in Europe, there is still a significant gap of around 7000 euros between comparable models on the European and Chinese markets. So the question arises: How can China produce so much cheaper?
Reuters also investigated this. One of the key factors is therefore battery production. Since Chinese companies control almost all of the raw materials and production themselves, a battery in China is significantly cheaper than in the rest of the world. The size of Chinese battery manufacturers also helps. They are probably using this to negotiate significant discounts on raw materials.
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The researchers have calculated that Chinese car manufacturers pay around 18 percent less for the battery in their electric car than Europeans. Since this is the most expensive component, this can significantly increase a vehicle’s profit margin.
But the size of many Chinese electric car manufacturers also contributes to cost savings. The megacorporation Geely significantly reduces production costs by building many different cars of different brands using the same technology. The Volvo EX30, Smart #2 and Zeekr X are largely the same car under the hood because they use parent company Geely’s infrastructure.
In this way, Geely can simplify supply chains and optimize production lines more easily. There are now also players in Europe who share production facilities, although not to this extent.
Chinese automakers are trying to offset low profits in the home market with sales in Europe
In addition, Chinese companies are subsidized by local authorities in many ways, especially to produce products for the local market. These include subsidies for the purchase of land to build new factories.
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The EU is therefore investigating whether this leads to an unfair competitive position for Chinese brands on the European market. Finally, these costs are also included in the production costs of a car manufactured in such a subsidized factory. However, this form of subsidization is much more difficult to understand than the variants awarded at national level.
By the way, it’s not just Chinese car manufacturers who benefit from subsidies. European car brands that have cars produced in China also benefit from government support. This is one reason why some European car manufacturers are skeptical about the EU investigation and possible higher import tariffs.
China has another advantage: generally lower labor and energy costs. This is also part of the total cost of every electric car produced. On the other hand, there is fierce competition in the Chinese market. That’s why electric all-wheel drive vehicles are offered there almost at cost price.
This explains why car manufacturers like BYD, NIO and XPeng are only too happy to serve the European market. On our continent they can still make generous profit margins without putting themselves out of the market. This way they can compensate for the low returns on their own market.
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Chinese automakers can maximize their profits through cost advantages
With such large profit margins, the Chinese have an additional advantage in the price war sparked by Tesla: they can be content with that for the time being. When Elon Musk’s company cut prices on its cheaper models several times, it prompted other automakers to do the same. Many manufacturers were forced to follow suit so that their electric models would not be pushed out of the market. BYD also followed suit and reduced the price of the Atto 3 from 44,000 euros to 37,990 euros.
But the European actors do not have this leeway. They were already suffering from very tight profit margins and cannot easily reduce prices significantly without rigorous changes to the corporate structure. Therefore, cars manufactured in Europe remain relatively expensive.
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Good news for Chinese competitors: They can also charge relatively attractive prices here and thus maximize the profit per car sold without affecting their competitiveness. The high margins on the European market must therefore be used to compensate for the low returns on the own market.
This article was translated from Dutch by Susanne Ködel. You can find the original here.
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Initiatives to ‘Zero’ Borrowing from Savings Certificates
– 2024-05-04 03:30:47
The government is going to take an initiative to gradually reduce borrowing from savings certificates to zero for budget expenditure. According to sources in the Ministry of Finance, which can start from the next fiscal year 2024-2025.
According to sources, the government is going to take this decision mainly on the condition of reducing interest expenses and International Monetary Fund (IMF). As a result, the amount of borrowing from this sector is expected to be reduced in the next financial year. In the current fiscal year 2023-2024, the target of borrowing from savings bonds is Tk 18 thousand crores. It is estimated to be reduced to 16 thousand crores in the next financial year 2024-2025.
When asked about borrowing from savings certificates, an official of the finance department said that government loans from savings certificates are very expensive loans. The highest interest here is above 12 percent. Hence, over the years the loan from savings has been consistently reduced. For this reason, various conditions have been imposed on the purchase of savings certificates by the government. For example, if anyone wants to invest in this sector above five lakh rupees, he must file a tax return. That’s why many people are not investing in this sector. At the same time, many investors are breaking savings bonds as the cost of living increases due to inflation. They are spending this money on family work. As a result, the sale of saving paper has decreased a lot. He said that the government should also reduce the amount of borrowing from savings bonds to comply with the loan conditions of the International Monetary Fund. We want to reduce the borrowing from this to zero in the next few years.
According to the latest data of Bangladesh Bank, the negative amount of net sale of savings bonds has increased to Tk 8 thousand 892 crore in the first eight months (July-February) of the current financial year 2023-24. In the same period of the previous financial year 2022-2023, the amount of net sales was negative 3 thousand 510 crores. Going negative means that the government no longer has to borrow from savings bonds. As a result, the government does not have to pay interest on loans in this sector. However, the government still has to allocate a large sum of money in the budget against paying interest on savings bonds sold earlier. For example, 40 thousand 20 crores have been allocated in the current financial year.
Common people are no longer interested in investing in savings bonds because inflation leaves them with no money left to save. According to the data of Bangladesh Bureau of Statistics (BBS), inflation in the country was 9.81 percent last March. After rising above 9 percent in March last year, it has not fallen below 9 percent in any month. That is, inflation has been above 9 percent for 13 months. Inflation is now believed to be close to 20 percent as private.
And those who have surplus money are investing in banking sector instead of investing in savings bonds. Many private banks are offering 10 to 11 percent profit this year. Investors are taking advantage of this opportunity. And ‘smart’ investors tend to invest in government treasury bills and bonds. Here the interest rate is between 11 and a half to 12 percent.
According to the statistics of Bangladesh Bank, the accumulated debt of the government in April 2023 by selling savings bonds was 3 lakh 60 thousand 500 crores. In this April, the amount of this loan increased by only 214 crores to 3 lakh 60 thousand 714 crores.
In the last fiscal year 2021-2022, a total of 1 lakh 8 thousand crore rupees of different types of savings bonds were sold. Out of this, 88 thousand 154 crores were paid to the customers for principal (investment) and profit (interest). At the end of the fiscal year, after the interest-principal payment of the savings bonds sold, the government’s net sales in this sector was Tk 19,915,750,000, which is 52.44 percent less than the previous fiscal year. The net sales amount in the financial year 2020-2021 was Tk 41 thousand 959 crores.
In the budget of the fiscal year 2021-2022, the government had set a target of borrowing 32 thousand crore rupees from savings bonds. As it can be seen, the government took 37.50 percent less loan from this sector than the target in the last financial year. A total of Tk 1 lakh 12 thousand 188 crore 24 lakh savings bonds were sold in this financial year. Out of this, Tk 70 thousand 229 crores was paid to the customers for the interest-principal of the savings bonds sold earlier. According to that, the net sales amount was 41 thousand 960 crores. Earlier in the fiscal year 2019-2020, the government had taken a loan of Tk 14 thousand 428 crores from savings certificates. In the history of Bangladesh, the government took the largest loan from savings bonds in the fiscal year 2016-2017, Tk 52 thousand 417 crores.
Initiatives to ‘Zero’ Borrowing from Savings Certificates – 2024-05-04 03:30:47
Alexandroupolis: Three arrests for human trafficking – They held a woman for work against her will
– 2024-05-04 03:05:29
Descriptions reminiscent of a slave market are included in the criminal case file for human trafficking and illegal possession of a travel document filed against three citizens, who were arrested in Alexandroupoli. The relevant case file also includes a foreigner, whose details have been identified.
Police officers of the Alexandroupoli Security Sub-Directorate, carried out secret investigations in the area of Alexandroupoli to locate a foreign woman, who according to information from “112” was being held by her employer against her will, due to the removal of her travel documents.
According to the Police, the patient was located at the home of the arrested, where it emerged that she had been taken by the foreign perpetrator, on March 27 through the Ormeni Border Crossing Point. The investigation revealed that the woman was handed over to the two nationals for a pre-agreed amount of money in order to provide work in their home and marry the third arrested person.
The identity card of the victim was found in the possession of a national perpetrator.
Those arrested will be taken to the Criminal Prosecutor of Alexandroupolis, while the preliminary investigation is carried out by the Alexandroupolis Security Sub-Directorate.
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