The German EV market has been gripped by a price war following the cessation of government subsidies in December. Notably VW, Tesla, BYD and Dacia in recent weeks have slashed the prices of their top selling vehicles, as they vie for market share in a changing European subsidy environment.
The Model Y was Germany’s top selling BEV in 2023, selling 45,800 units, now Tesla has cut the price of it by EUR1,900 (USD2,069), to EUR42,990 (USD46,800). Additionally, it also reduced prices for the Model Y Long Range to EUR49,990 (USD54,400) and the Model Y Performance to EUR55,990 (USD61,000), taking EUR5,000 (USD5,400) of their price tags. Further to this, Tesla has dropped prices across Europe in a bid to keep high sales figures.
For much of 2023 the base price of the VW ID.3 model was EUR39,995 (USD43,550). Since January in Germany it has offered the ‘Volkswagen Umweltprämie’ or ‘Volkswagen Environmental Bonus’ that extends price discounts to all the ID family. It offers EUR7,735 (USD8,400) off the ID.4 and ID.5 series, and EUR7,020 (USD7,600) off the ID.3 Pro. This reduces the lowest price for an ID vehicle to around EUR33,000 (USD36,000). However, the ‘Environmental Bonus’ offer only extends until the end of March. Elsewhere in Europe, VW has dropped the prices for the ID.3 and ID.4 series allowing each model to eligible for respective state subsidies and remain competitive.
BYD holds only a small market share in Germany, selling just under 4,000 vehicles there in 2023. However, it has cut the price of its top selling Atto 3 to just over EUR40,000 (USD43,550) down from EUR47,000 (USD51,100). This is indicative of its plans to further its expansion into Europe becoming a major competitor, as it also introduced its Dolphin and Seal models onto the European market at the end of 2023.
The Dacia Spring failed to meet the criteria of France’s ‘Bonus Écologique’ and subsequently is no longer eligible for the subsidy. As a result, it now aims to increase sales in other European economies. Using the momentum of the discontinued German subsidy, it has cut the price of the Spring by a huge EUR10,000 (USD10,900) to just EUR12,750 (USD13,900), however similar to VW, it is only doing so until the end of March this year.
Tesla and VW appear to be playing a pricing war on the broader battle ground of Europe, as both have reduced prices in Norway, Sweden, France, Belgium, and Italy. Whilst both Dacia and BYD are focusing their sale slashes in Germany, Europe’s largest automotive market. In Germany, the price cuts come to alleviate an expected downwards turn in sales following the ending of subsidies.
Both Tesla and VW account for the top five selling models in Germany (Model Y, ID.3 and ID.4) notably the other two in the top five, the Skoda Enyaq iV and the Fiat 500 have not announced price changes. With two big players announcing pricing cuts we may also see others following suit. Battery prices have continued to fall in recent months, we can expect to see EV prices continue to fall as OEMs look to pass some of this saving onto consumers.
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