The Chinese have a big advantage over European manufacturers when it comes to electric cars, with production costs 10,000 euros lower for several reasons, said the head of auto parts supplier Forvia, quoted by Reuters.

The difference of several thousand euros when it comes to producing an electric car in China compared to Europe is one of the reasons why the big European manufacturers don’t produce many small cars for the city. Battery costs are still very high and profitability is low in lower-end models, where the battery ends up accounting for more than half of production costs.

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China will produce better and better electric cars, and the Europeans will not be able to stop the introduction of these models to local markets, says Patrick Koller, head of Forvia, the world’s seventh-largest auto parts supplier.

Koller says there are several advantages that allow the Chinese to produce EVs at much lower costs than the Europeans: lower research and development costs, lower labor costs and lower capital costs.

He also says that the whole situation is more dangerous for Europeans than for Americans, because taxes are so high in the US market that the Chinese are unlikely to create a large market share. Chinese brands have entered Europe in recent months, and this year they account for almost 10% of the market for new electric cars.

A JATO report last autumn showed that the average price of electric cars in Europe rose from €48,000 in 2015 to €55,000 in 2022. In China, so many small models appeared that the average price for them dropped from 66,000 to 31,000 euros.

Forvia is a company that arose when the French from Faurecia absorbed the German company Hella. Both have factories in Romania.