Along with the price war for small electric cars, another battle is also being played out. This time in the premium vehicle segment, because the electric is shaking the German dominance, which has been established for decades. And for good reason: this market is a godsend. ” continued A small city car The margin will be 500 euros a German premium SUVWhich isn’t top of the line premium, the margin is 15,000 euros, or 30 times that of a mid-range car. »Eric Esperance, partner at the Roland Berger firm, explains.
It is still necessary to define what is premium. Quality materials, including reduced noise, previously reserved for easy-to-drive models, but also the most high-performance engines, are expected. premium has changed over time. Now, the level of technology embedded in the vehicle, especially connectivity, is also a criterion.
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It is at this point that Tesla particularly focused on establishing its brand image. premium On the old continent, before achieving significant price reductions and positioning itself in the volume market.
” Development of a premium product requires continuous investment in developing all these characteristics », Thomas Weber, BCG’s associate director and expert on automotive topics, added that “It is very difficult to position yourself in the premium segment” Because it is primarily a brand image that has been built over time.
Image as protection
And on this, German manufacturers are one step ahead. They have all started their transition to electric. This year, Porsche is launching a new 100% electric SUV called the Macan, before accelerating by marketing the popular electric Cayenne. The brand has announced that it wants to deliver more than 80% of new fully electric vehicles by 2030. BMW, for its part, plans to convert its Munich factory to producing only electric cars from 2027.
For automotive experts, German manufacturers still enjoy a very strong brand image that gives them an advantage in the transition of the automotive industry. ” Premium is more secure because it is more difficult to imitate brand reputation like luxury », confirms Thomas Weber.
They can also count on a significant distribution and maintenance network on the old continent, again a strong argument, especially for businesses, an important market. premium. “The cross has a way of replacing a part defective or broken On vehicles from new market entrants, you sometimes have to wait several months”, Eric Esperance has regrets.
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German manufacturers “suffer risk”
But companies are increasingly considering fleets of electric vehicles premium Chinese, usually cheaper than their European counterparts. ” They risk getting hurt », says, for his part, Arnaud Aymé, transportation expert at Sia Partners. Because brand image can change anytime. And for good reason, German manufacturers, known primarily for their knowledge of thermal engines, do in fact offer vehicles with autonomy. very weak », according to Eric Esperance, adding:
” For the moment, the main European premium manufacturers offer models with around 500 kilometers (according to the WLTP standard), where customers of this type of product expect twice as much. »
The reason: German manufacturers manufacture their batteries overseas, mainly in China, and put them in models with high on-board power or very heavy electric motors. In contrast, new manufacturers specializing in electric are producing lighter vehicles that allow them to use larger batteries, in fact, more autonomy.
Autonomy and software as vulnerabilities
The latter often make their own batteries to make them lighter. Tesla has thus attached several Giga factories next to its manufacturing factories. In China, new brands are launching in the market premium, like Nio, but in this niche. The manufacturer has thus announced a premium electric car with a range of 1,000 kilometers, which may emphasize the choice of users in the future.
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German manufacturers will also have to upgrade the software embedded in the vehicle. Tesla, but also new entrants like Lucid “ Software updates take place in 15 days compared to three months for Europeans », observes Eric Esperance. Lucid also unveiled its new model at the Geneva Motor Show two weeks ago, aiming to attack the European market.
Asian brands move upmarket
German manufacturers are also challenged by other foreign manufacturers who are long established on the European market. Giant Toyota, for example, is banking on its Lexus brand increasing its sales in Europe by more than 50% in 2023 thanks to electrification. The Japanese group will offer only battery-powered vehicles in Europe under this brand by 2030.
At the Geneva Motor Show, the MG brand, an old historic English brand, surprised everyone by launching a new range called IM for Intelligent Mobility in Europe from 2025 onwards. On its site, the Chinese manufacturer mentions a brand “ Present in the premium sector which will focus on luxury sedans and large SUVs “
According to Thomas Weber, one of the most used strategies by manufacturers is to gradually move upmarket to attack the premium market by becoming an already established brand. So the threat to German manufacturers will definitely come from these brands who already achieve large volumes in the lower segment like BYD or MG and which will gradually move upmarket. Moreover, German manufacturers are already losing the battle in this segment in China. In Europe, Mercedes, BMW and Porsche still managed to protect their sales. But how long?
