The Chinese cheap EV flood?

Much ink has been spilled on affordability of EVs. Turns out several Chinese companies have been making affordable EVs for some time now. In fact several Chinese made Tesla Model Y’s are cruising our streets (source), so seems at least one automaker has figured out to legally get Chinese made cars into Canada. Further, in Europe, several Chinese brands have had some success selling less expensive EVs to the masses. Lets explore how Chinese EVs might fare in the Canadian market.

Chinese EVs have made some headway into Europe (source). Generally the plan has been to price a “fully-loaded” EV at a price-point a shade under what an entry-level model would otherwise have been. Take for example the German made Volkswagen ID3, which starts at about 40k € (source), and compare it to the MG4, which starts at 30k € (source). In a recent comparison, the ID3 scores better in most categories, but the MG4 does manage a win here and there, overall though, given the 10k €, some suggest the MG4 might be the smarter choice (source).

So how does this translate into the Canadian market? Well, one problem is that there is no ID3 and there is no MG4 (source). Apparently, according to one Mr. Thomas Tetzlaff, a spokesman for Volkswagen Canada, “Sadly, the market for smaller vehicles is dying in Canada”. Hence we may never see the ID3 or the MG4 available for sale in Canada.

But there is nevertheless a space in the market for a cheaper EV. As we discussed in a previous post, most gas cars sit in the “50-60k” range, while EVs are in the “60-70k” range. This suggests there is room in the market for EVs priced in the “50-60k” range, particularly if they happen to be SUVs (source).

Vinfast of Vietnam certainly seems to think so, their VF8 is aimed squarely at the “crossover” market. Dimensions are similar to the popular Toyota RAV-4, but with a price-point at about 50k source. That’s quite a bit less than the 60k for a Model Y (source), and a little less than the 55k for the Nissan Ariya (source). Granted, unlike Tesla or Nissan, Vinfast insists on a leasing model for the main traction battery. Which could add a $100 or so to the leasing cost (source), depending on ones financial assumptions that could put the 50k price tag on par with the 55k for the Ariya.

So will a Chinese cheap EV flood finally get us to affordable EVs here in Canada? Perhaps, after all, Chinese consumers, like their Canadian counterparts, are falling for SUVs in ever increasing numbers (40% in 2023, compared to 55% of Canadians in 2022 (source and source). Thus in a few years, to stay competitive, Chinese automakers will have models that might tempt Canadian consumers, just not yet, and as the European experience shows, prices are lower yes, but perhaps only by a little bit.