The big comparison of carmakers: Tesla $TSLA
vs. BMW $BMW
in China🇨🇳
Hi folks,
after the last article about the car manufacturers BMW, Mercedes and Volkswagen from Germany was so well received in China, we now continue with a comparison to Tesla and BMW according to the vote. What makes Tesla better than BMW in China?
Before we start as always my DisclaimerThis is not investment advice. It is also not an invitation to buy / sell financial products. I only describe my opinion here and you have your own responsibility towards your investments. So I also assume no liability.
So that you can better understand some of my statements on BMW, I recommend my stock analysis on BMW on YouTube. There, I go into detail about BMW's existing problems and outline why BMW's management would do well to come down from the ivory tower and take a closer look at the Chinese competition in the e-automotive environment instead of resting on a wave of combustion engine success in Germany and Europe that has long since ebbed away.
In addition, 2 parts on the big comparison of automakers have already been published:
Part 1
- The big comparison of carmakers: Mercedes in China
https://getqu.in/4WZZNBXYADXT/QgUEOPs9ki/
Part 2
https://getqu.in/4WZZNBXYADXT/xWl9vlY9B3/
We are now in part 3:
Part 3 (YOU ARE HERE)
- The big carmaker comparison: Tesla vs. BMW in China
First of all, let's establish why you should bother with this comparison in the first place. For this, a simple listing from source (1) about the most popular e-cars in China helps us. We learn that the following brands are included in the top 5 e-brands:
(1) Hongguan Mini EV from the SAIC-GM-WULING company.
(2) QIN from BYD, the Chinese manufacturer we know.
(3) Model Y from Tesla
(4) Model 3 from Tesla
(5) Han from BYD
What's with the listing?
Have you noticed? There is not a single German automaker in this list. Not even if we extended the list to the first 15 places would we find even one German manufacturer. So there's no BMW 330e or VW GT RS in an electric version. Yet BMW, with the help of BMW Brilliance, is currently building an extension to existing factories in China and makes 22.8% of its sales in China. If you're interested in the reason why, feel free to check out the sources above. As a BMW 3-series fan, I particularly disliked the answer (see (1)).
The Hongguan Mini EV from SAIC-GM-WULING is an extremely luxurious sedan with e-drive, which can be used in any standard parking lot to get a lot of looks and let the engine roar so that no BMW can keep up with it and......
Not at all
This vehicle resembles a Smart of the 2010s from the outside and impresses above all with its really very low price. Within 50 days of its release, 30,000 Chinese bought this e-electric car. By the end of last year (i.e. 2022), SAIC-GM-WULING alone was able to sell 550,000 units of this e-small car. For comparison, BMW sold 44,344 in all of 2022 (see (1), (2), (3))....
From ALL BMW E-AUTO CONSTRUCTION!
BMW's most popular model line - the BMW iX3 was at 26,669 electric cars. So we calculate:
2022: Most popular car BMW / Most popular car SAIC-GM-WULING.
...do we really want to calculate this?
After only 50 days, SAIC-GM-WULING had already achieved: 30,000 cars / 44,344 YEAR SALES BMW = 67.65% of the annual sales of ALL BMW series.
Only 50 days for over 2/3 of total BMW E volume. I leave the interpretation to you.
If we are particularly fair gg. SAIC-GM-WULING, we calculate model against model:
2022: 26,669 BMW iX3 / 550,000 Hongguan Mini EV = ...
4.85 percent :)
Yes really :)
Here, SAIC-GM-WULING demonstrates the German luxury carmaker with an e-stromer whose maximum range is just 120 - 170 kilometers (depending on equipment). How do you do that (see (4))?
By turning the price screw: The Hongguan Mini EV costs the equivalent of €3,700 - €5,000. This relatively low price forces the manufacturer of the BMW iX3 shown to make radical price cuts. At market entry, the price of the i3 electric sedan was 349,900 yuan. That is the equivalent of about €47,640. Measured against the national income per region in China, that's a lot of money, so an e-car priced at less than a tenth of that is a welcome alternative.
Specifically, in China, one earns an average of 24,386 USD in Beijing. That's €22,881.38 at the time of this analysis. Thus, BMW's car is at its MSRP at:
47,640€ / 22,881.38€ = 2.08 times the annual income of an average Beijing resident.
This is highly problematic because Beijing is considered the richest province in a sector comparison of all provinces in China. All other provinces are at a fraction of this annual income (see (4), (5)).
What is BMW doing?
A mixture of watching helplessly and acting late. Meanwhile, individual BMW dealers in China approve discounts of up to 100,000 yuan. That is currently 13,586.34€, so that the price has fallen by a maximum of 28.52%. Even this only helped to a limited extent to alleviate the sales worries as shown above (see (3), (4), (5)).
SAIC-GM-WULING is not a one-hit wonder, but has been active on the market since 1958, when it started out building small cars and pick-ups. In this context, the brand itself was only created in November 2002, so that we are virtually talking about a 100% local Chinese-networked company that recognized the need for cheap e-cars early on (see (6), (7)).
What is Tesla doing?
The only right thing in terms of product and pricing policy. Not without reason do 3rd and 4th places go to Tesla in a country dominated by a majority of local suppliers. While in 2020 the Chinese government's subsidy was based on range, the focus for 2022 was on purchase price. The intention was to promote cars below €40,000 in particular and to reduce the associated premiums in parallel.
It happened that from the 2,130€ premium (for 300-400 km range) and the 2,960€ premium (for range greater than 400 kilometers) Tesla could draw some support from the Chinese state. The Chinese research institute calculated 290 million € advantage for Tesla (see (9)). This leads to the fact that the rather protectionist attitude just Tesla with the local factories like in Shanghai could report massive gains and can be seen as the main beneficiary of this E-policy.
In 2022 as briefly mentioned above, however, the respective subsidies fell to 1,660€ and 2,300€ and on top of that came the 40k€ barrier, which of course did little to nothing to help the BMW models mentioned above and rather poured oil on BMW's burning pricing. Tesla reacted and essentially adjusted the prices several times - first against the expectation with an increase of the two leading models Y and 3, only to have to row back (less elegantly) afterwards. This pricing policy was branded in some sources as "lurching course" with resulting complaints from Chinese, who demanded the return at the lower price on the spot - nevertheless Tesla managed to at least be considered as more valuable, but at the same time not to break the barrier of 40k€. Thus, the advantages of BMW's partly high price policy were combined - but also the affordability and the premium of the Chinese state (see (11), (12), (13), (14), (15)).
1.31 million vehicles could be sold by Tesla in China in 2022. Compared to the 44,344 BMWs in the Middle Kingdom, these are figures BMW can only dream of. Let's put the figures in a direct tabular comparison (see (4), (9), (11), (12), (14)):
BMW most popular e-model: BMW iX3 with 26,669 units.
BMW China e-total sales 22 : 44,344 BMW models
SAIC-GM-WULING most popular e-model: Hongguan Mini EV with 550,000 units
SAIC-GM-WULING China e-total sales 22 : 1 million (isolated from the parent company and other sub-brands of GM in China).
Tesla most popular e-model: Tesla Model Y with 315,314 units.
Tesla China e-total sales 22: 1.31 million (includes all 4 leading models)
Why doesn't this stand out?
You may have noticed that I had to use 5 sources for the last tabulation in order to ensure a reasonably striking and representative comparison.
The answer why this was necessary and why this is not noticeable in normal 0815 car analyses can be found in my BMW video and the associated Getquin article.
It's a time game and I fervently hope that BMW will increase CAPEX spending or at least commit to a multi-drive approach. It can't go on like this.
A BMW fan
#tesla
#bmw
#china
#automotive
#emobilität
Sources:
(2) https://www.auto-motor-und-sport.de/elektroauto/saic-gm-wuling-mini-ev-china-absatz/
(4) https://www.electrive.net/2022/11/30/bmw-wird-china-i3-wohl-nur-mit-hohen-rabatten-los/
(5) https://www.tradecommissioner.gc.ca/china-chine/wages-salaires.aspx?lang=eng
(6) https://www.electrive.net/2022/03/10/saic-gm-wuling-will-nev-absatz-verdoppeln/
(7) https://www.sgmw.com.cn/en/Milestones.aspx
(10) https://www.elektroauto-news.net/tesla/e-automarkt-china-waechst-tesla-absatz-sinkt
(11) https://news.gm.com.cn/en/home/newsroom.detail.html/Pages/news/cn/en/2023/Jan/0106-sales.html
(12) https://www.statista.com/statistics/1305890/number-of-cars-sold-by-saic-gm-wuling/
(13) https://cnevpost.com/2023/01/11/tesla-model-y-best-selling-premium-suv-in-china-in-2022/
(15) https://cnevpost.com/2023/01/11/tesla-model-y-best-selling-premium-suv-in-china-in-2022/
