While competition has been raging between manufacturers on prices in China, for the past few weeks, several signals seem to indicate that the situation could also change in Europe. Automotive groups, which have long relied on high prices, are beginning to think twice about it.
A price down from 16,500 euros. This is the drop recorded in France by the Tesla Model 3, in less than three months (counting the obtaining of the ecological bonus, of 5000 euros). The Californian sedan is now at 41,999 euros. It’s a tiny bit cheaper, for example, than Renault’s Megane E-Tech. Since January, the Californian manufacturer has twice reduced its prices in Europe, and this is starting to seriously worry its competitors.
Tesla’s offensive is “a challenge” recognized the general manager of the Renault brand, on the occasion of the publication of its quarterly turnover on Monday.
“It’s a warning that we are watching closely,” continued Fabrice Cambolive.
“We are going to analyze country by country, market by market, what level of competitiveness we need to have to stay in the game,” he concluded.
Citroën has already lowered its prices
At Stellantis, we don’t want to talk about a price drop yet, but Philippe de Rovira recognizes that “the environment is changing”. According to the director of the 14-brand manufacturer’s subsidiaries, “the price increase recorded in 2021 and 2022 will probably not be repeated in 2023, prices will certainly stabilize”.
In fact, however, Citroën, one of the brands in Stellantis’ portfolio, has already lowered the prices of its electric C4 at the beginning of April. The ë-C4 saw its price decrease by 4710 euros. “We have found a production capacity and a logistical capacity that allows us to make this proposal”, explains Sébastien Caron.
With this offer, Citroën’s strategy is to respond “to market expectations”, develops the company’s new France director, who adds: “manufacturers have entered an inflationary spiral and have put themselves on the sidelines “. If the test is conclusive on the electric C4, Citroën could thus apply price reductions to other of its models in the coming months.
For many industry analysts, manufacturers, one day or another, will be forced to respond to the offensive of Elon Musk’s car brand.
“Tesla is a reference in the electrical sector. If the company moves, the others are obliged to follow it”, analyzes Olivier Hanoulle, automotive specialist at Roland Berger.
“If the manufacturers do not want to lose market share, they are obliged to align themselves, even if that means trimming their margin”, continues the expert.
An inevitable price war
Still, not all players in the automotive sector have the punching power or the kidneys as solid as Tesla. “Manufacturers who only achieve a small operating margin today risk finding themselves in difficulty”, affirms a connoisseur of the sector, who adds: “for some, like Renault for example, it will be tricky”.
With the announced end of the semiconductor crisis and the rebalancing of supply and demand, “it’s the end of the enchanted parenthesis for manufacturers”, observes Olivier Hanoulle, “if you add to that the arrival on the market of new players such as Chinese groups, a price war seems inevitable in Europe”.
