China EV Week goes to Germany where Mercedes plans to eat Elon

It’s still China EV Week, as we head to beautiful Downtown Munich for the annual International Motor Show Germany – or Ze Internationale Automobil-Ausstellung – one of ze world’s largest mobility trade fairs.

IAA Mobility officially kicks off on Tuesday and all the hype is around China, Mercedes and Not Elon.

The Chinese upstart EV makers (Build Your Dreams) BYD and XPeng both enjoyed near 6% bumps since Friday on the back of sterling production numbers and widespread spidey-senses, tingling over what the twin Chinese EV brands will bring to one of the world’s largest auto shows.

The battle for Europe

Europe has quickly emerged as the key battleground-state for EV makers right now.

The unseasonally soft Chinese domestic spend and its teetering consumer confidence have provided local EV makers to leave the nest, perhaps a little earlier than expected. But for all makers the jig is up and it’s time to put the cards on the table as EV uptake glides past tipping point.

Europe’s home teams and local manufacturers can expect to take on all-comers with EU markets clearly ahead on EV adoption rates, while the US still wrestles with regulatory ratings and some wild tariff-based barriers to entry.

Tesla under pressure

Usually, the various mega auto shows are just part of the equally-ever-lasting-ongoing Tesla roadshow, where everyone comes for the cars, but stays for the Teslas.

Not this year.

Tesla will in fact, be turning up to Munich for the first time in almost a decade and they’ve surely made the right decision.

Instead of competing for headline inches with the Chinese brands, as everyone might’ve expected suddenly Tesla is having to watch its rear view mirror, now that homegrown hero Mercedes Benz has scared the bejesus out of Team Elon by releasing its own fresh set of EVs.

German-designed and German-manufactured EVs.

Speaking of those, XPeng (XPEV) has a few to tout as it makes its own Munich debut, tonight.

The Beijing-based EV start-up will feel right at home, too, after signing the cheque for its US$700mn cash investment from… the makers of the Tiguan, Volkswagen.

XPEV released a statement overnight, declaring its timely intention to bust on into the German auto market next year – mere months away – clouting the car-loving, environmentally sensitive Deutsch with its P7 sports sedan and G9 SUV models.

“Today represents an important step on our international expansion journey,” Xpeng’s vice chair Brian Gu said.

“XPeng is entering one of the most competitive automotive markets in the world, with customers that expect the absolute highest standards.”

Eric Xu, Vice President of International Markets at XPeng Motors, also mentioned that France would make a nice inclusion and be targeted as another new market for XPeng next year, with a possibility of even popping into the tunnel and entering the UK market as well.

Markus Schrick, Head of XPeng Germany, said XPeng plans to sell through traditional dealership channels and is currently in discussions with several larger German mega-chain stores.

Of course, XPEV’s been selling in the EU for a while now, both models are already on the roads in 4x other European markets, and if you’ve gone for a drive in Europe lately, it really is just one big market with many rude drivers.

XPeng stock has been gaining since Friday when its monthly update continues to show production is amping up, delivering 13,690 cars last month, comparing to the 11,008 in July.

Build Your EU Dream

Unlikely to be outdone, BYD says it’ll roll out x6 electric vehicles for the European market at the Munich show.

An unnerving moment for Elon will be the long-awaited, firework-laden European introduction to BYD’s own ambitious luxury brand, the ill-named Denza.

Ill-boding for Elon is that the aforementioned Denza is the fruit of an unholy joint venture union with… Germany’s Mercedes-Benz Group (MBG) and its D9 electric minivan.

BYD’s stock is also looking strong. Battery-electric sales last month jumped by almost 90% on the same time last year.

AS BYD grows up – it’s actually just announced plans to ditch the ever-so-slightly corny Build Your Dreams tags – research out of UBS suggests the old-school auto makers are squandering their advantages and finding themselves left in the wake of BYD et al when it comes to the only things that matter – costs and technology.

UBS got its hands on BYD’s Seal Model and pulled it apart to see what goes where, concluding BYD had a $US10,000 cost advantage because of the advanced designs and efficacies of its batteries, tech and parts.

Meanwhile, TSLA has a serious Mercedes-Benz problem

Alas, for Tesla, its European dreams are unlikely to go as smoothly as everything else has. It’s great that the EV innovator is actually turning up this year, but TSLA has a serious Mercedes-Benz problem.

MBG timed the gala release of its brand new electric-sedan concept to perfection at it’s IAA unveiling on home turf.

The tagline was that Mercedes has produced a gleaming CLA Class branded electric sedan, which absolutely smokes Tesla’s Model 3 for single charge range.

Tesla’s got an updated version of the same Model 3 sedan, but nothing that’ll turn heads on the same scale.

TSLA actually chose to debut the updated Model 3 in China last week. It’s got a slightly new interior and a slightly better range from each charge. What’s increased the most, is the price. And this is probably going to furrow some eyebrows, after TSLA itself started the price war, which has been slamming EV margins at a time when everyone would prefer to be slamming market share.

Mercedes-Benz meanwhile declared with much enthusiasm that its new CLA Class can go for circa 466 miles (IDK in kms), which pulls the leg out from under Elon, since the long-range version of the Model 3 can only crank out 391 miles on the same basis. And that was its USP.

“This new model family is inspired by a generation of car buyers who want that unmistakable Mercedes-Benz feel… They also seek a sustainable choice that is a cut above the rest. This hypermiler* is the one-litre car of the electric age,” said Mercedes-Benz Chairman Ola Kallenius.

(*Ed: hypermiler is a Mercedes Germanism for really, really efficient)

But Tesla has time. It’s been out front of this sector forever and the M-Benz CLA Class is but a concept vehicle for now.

That said, production is thought to kick off as soon as 2024, the CLA Class being but one of many new riffs on an all-electric segment of entry-level vehicles at Mercedes-Benz, a flotilla which also features x2 new SUVs.

Mercedes-Benz more than doubled sales of battery electric vehicles last year to 117,800, representing almost 6% of its total vehicle sales to retail customers.

That leaves it as a small player next to Tesla’s more than 1.3 million deliveries in 2022 but Mercedes-Benz aims to be selling 50% electric vehicles by 2025 and be fully electric by 2030.