Chinese manufacturers are stepping up the competition to dominate the electric-vehicle market. China’s BYD and
Neither Volkswagen nor Renault immediately responded to requests for comment.
BYD’s Seal battery-electric vehicle is an example of the rest of the industry’s concern. Recently, the price on the model has been reduced to less than 30,000 dollars. UBS estimates that BYD is earning a 16% gross margin and 5% earnings before interest and tax margin on Seal, which is similar to the profits made on mass-market internal combustion engine cars globally.
“In our basic scenario, the global market share of Chinese OEMs [original equipment manufacturers] They will grow from 17% to 33% in 2030, with European manufacturers seeing the largest market share. “Between now and 2030, the share of global OEMs could drop from 81% to 58%,” Hamel wrote.
BYD is often produced as a competition.
Tesla
( TSLA ) But Hummel suggested the Elon Musk EV maker could increase market share with its Chinese rivals.
Tesla’s long-awaited compact EV, which UBS expects to launch in 2025 or 2026, could become its best-selling model at an affordable price thanks to the company’s simpler production processes, Hummel said.
However, good news for Tesla is bad news for European manufacturers, according to UBS. His analysts downplayed both
Volkswagen
(VOW.Germany) and
Renault
(RNO.France) to sell independent.
“VW is negatively exposed to the growth of Chinese automakers globally,” Hamel wrote. UBS analysts estimate that Volkswagen’s batteries, software and Scout EV units will post losses of 15 billion euros ($16.2 billion) and take 30 billion euros in cash between 2023 and 2027.
Volkswagen sought to respond to threats from China by making a shock $700 million investment in Chinese EV maker Xpeng ( XPEV ) in July. However, UBS talks about partnerships between legacy manufacturers and disruptive startups
Xpeng
They have worked many times.
Meanwhile, Renault is planning an initial public offering of its EV and software unit Ampere. UBS analysts argue that BYD and Tesla’s stake could overshadow Ampere’s IPO in Europe and limit its value.
They reduced their target on Volkswagen from €135 to €100, while Renault’s target was lowered from €42 to €31. Volkswagen shares fell 4.4% to €126.10 in Germany. Renault shares fell 5.5% to €35.29 in France.
For U.S. manufacturers such as Ford ( F ) and General Motors ( GM ), the risk is less as government subsidy conditions on EVs limit Chinese manufacturers’ U.S. path, the analysts said. He said Ford has more European exposure and GM could lose market share in China.
Write to Adam Clark at [email protected]
