Electric vehicle market is overheating, says Volkswagen China CEO. Here's why
- Volkswagen China CEO has taken a jab at Tesla for starting a price war by aggressively reducing the latter's EV prices.
Volkswagen Group China CEO Ralf Brandstaetter believes that the electric vehicle market is overheating. He also said that high capital investment and offering discounts for electric vehicles will eventually harm the interests of the consumers, reports British automotive publication Autocar UK. Brandstaetter said that the auto industry is facing a situation where the market is overheating. He was especially critical of the discounting of electric vehicles in China.
Speaking about the current situation of the electric vehicle market, Brandstaetter said that the intense market competition and high battery prices make the manufacturers face severe economic pressure. He also pointed to the fact that short-term sales success requires extremely high capital investment. As the Volkswagen China CEO further stated that this situation is pushing the EV startups to a condition where they face a financial squeeze and are exiting or about the exit the market, or are in urgent need of new capital investment.
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China is currently leading the global electric car market. Massive discounts from the automakers and several incentives from the government on electric cars have boosted sales and demand for them. The discounts and aggressive price cuts have been introduced by Tesla, which the Volkswagen China CEO believes has impacted the EV industry negatively in the long run. "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," he said.
Brandstaetter's comments are clearly a reference to Tesla, which started an EV price war in China and in other global markets in late 2022. Speaking about Volkswagen's plan to offer such discounts, Brandstaetter said that the company doesn't intend to engage in unhealthy market competition to achieve short-term delivery growth.
