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China is the world's largest automotive and electric vehicle market, and everyone wants a share of the pie. The battle between global and local brands is intense and is even more fierce in the EV space because of the sheer number of startups also vying for attention. In all of this, Mercedes-Benz finds itself in a precarious position because while it has a dominant share in the luxury space, the EV segment is still quite complex.
Mercedes-Benz CEO Ola Kaellenius admits that the Chinese EV market may matured upwards from affordable EVs. "It is absolutely true that the growth of the electric market in China has been from the bottom. segments where we almost don't have anything," he was quoted as saying by Reuters. "Premium and upper luxury is still in its infancy. We have to apply some strategic patience here and look at how this grows."
Mercedes offers models like EQE and EQS electric SUVs in China and late last year, was forced to cut prices in order to make these more attractive to prospective buyers. While demand for EVs in China has been on the up, the rising number of players has led to cut-throat competition. Some of the biggest global players here include Tesla, Volkswagen and Mercedes. The dominant home-grown players are BYD, SAIC, Great Wall Motor, Geely, Xpeng, Chery and Nio. Models like Hongguang Mini EV - launched in 2020 - has had a price tag of 28,800 yuan or around $4,300. There are dozens of vehicles in the $10,000 to $15,000 price brackets which are manufactured by local brands.
So while critics can continue claiming that Chinese labour costs are low and local companies tend to spend far less on research and development, there is a persistent worry for well-established brands to offer lucrative pricing regardless of production positioning in segments.