The price war has already reached electric vehicles, and it’s not about Tesla or Chinese brands.

Just a year ago, when Tesla has reduced the prices of its electric cars by up to 20% To increase sales volume and market share, other manufacturers will not hesitate to criticize the decision American company. Many brands appreciated Tesla Strategy risky and recklessalthough his own Elon Musk will be responsible for remembering this profitability the company was still “of the best”. Its competitors refused to play Tesla’s game in order to avoid a price war with unpredictable consequences.

A year later, the conflict is already an undeniable reality and almost all brands had to reduce their rates their electric vehicles. Interestingly, Tesla was the last to do this, and this Wednesday reduced the price of Tesla Model Y in major European markets up to a number from 42,990 to 55,990 eurosup to 10,000 euros less than a year ago.

Tesla cuts the price of Model Y

Tesla isn’t the only one to blame for this price war.although it has something to do with its aggressive discount policy. Chinese brands are not to blame either., although they also bore some responsibility. The price war in Europe was provoked by withdrawal of assistance for the purchase of electric vehicles in Germanywhose coalition government put end of environmental bonus who encouraged electric mobility with generous assistance to companies and individual clients.

Germany is the main car manufacturer in Europe and largest European market for electric vehicle with 470,000 units registered between January and November 2023. This represents 34% of total sales in the European Union (a third of the electric vehicle market), according to the European Automobile Manufacturers Association (ACEA).

The effect of removing the environmental bonus was immediate. Sales of passenger electric vehicles in Germany fell 22.5% in Novemberalthough the biggest drop occurred in September (-28.6%) after the scheduled end special assistance for companies. Sales plug-in hybridswhose bonus also ended, collapsed 59.3% in November, and the accumulated annual decline was 46% in the absence of data for December.

He sales collapse was so large in the main market of the European Union that producers had no choice but to accept bonus withdrawn by the German government. Volkswagen, Stellantis, Audi, Mercedes-Benz and Kia they announced that will finance the subsidy for electric vehicle buyers, up to 6750 euros prices for electric vehicles will be reduced.

BIDwhich has become the largest electric vehicle manufacturer in the world with sales volume three million units in 2023also announced a few days ago that reduced the cost of its models to 7,000 euros in Germany. A BYD Atto 3 with basic trim costs now 37,990 euros in Germany 2000 euros less than in Spain. A Chinese company that has just arrived in Europe with a number of five 100% electric modelswas recognized as Tesla’s main competitor and forced the American company counterattack with new discounts.

The price war has started and has just begun because It can be expected that other EU countries will follow Germany’s example. and end assistance for the purchase of electric vehicles as sales increase and electric vehicle weight consolidation in the shop. In Spaingovernment extended assistance Postpones Plan III until July 31, 2024., although it is unknown what will happen after this date. The weight of passenger electric vehicles in Spain is much less than in Germany. 5.4% compared to 18.3% in Germany.so it seems premature to abandon subsidies for now.