BMW reduces prices and Audi offers discounts Traditional luxury brands need to lower their proud heads in the face of electric vehicles

Traditional luxury brands like BMW and Audi are lowering prices and offering discounts in response to the rise of electric vehicles

【phoneauto】Electric vehicles are the development trend of the future automotive industry and an important measure for countries around the world to respond to climate change and achieve carbon neutrality. With the advancement of battery technology, the improvement of charging infrastructure, policy support, and consumer recognition, the electric vehicle market has experienced explosive growth, especially in large markets like China. According to data from the China Association of Automobile Manufacturers, in 2022, China’s production and sales of new energy vehicles reached 7.058 million and 6.887 million respectively, an increase of 96.9% and 93.4% year-on-year, maintaining the global number one position for 8 consecutive years.

However, while the penetration rate of new energy vehicles continues to rise, traditional luxury brands are lagging behind. Just recently, it was reported that FAW Audi launched an astonishing discount activity for internal employees. The flagship model FAW Audi e-tron, which originally cost over 500,000 RMB, is now sold at half price. The luxury version of e-tron 50 quattro, priced at 546,800 RMB, can be purchased for only 273,400 RMB, directly competing with the Q3. This price reduction is extremely rare for FAW Audi.

Similarly, another traditional luxury brand, BMW, has recently started a large-scale price reduction. The official starting price of the BMW i3, which was originally 353,900 RMB, can now be purchased at many dealerships for 250,000 RMB, a reduction of over 100,000 RMB. Although not as significant as Audi’s half-price discount, it is still equivalent to a 30% discount. Unlike Audi, BMW’s discount is available to all consumers. Why are these luxury brands, which used to require additional fees in the domestic market, now drastically reducing prices in the era of electric vehicles?

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Technology is one of the core competitiveness in the new energy vehicle industry, as well as a key factor determining product performance, quality, safety, and cost. In the field of electrification, the three core technologies of batteries, motors, and electronic controls are particularly important. However, in these aspects, traditional luxury brands have not demonstrated sufficient technical strength, and instead lag behind domestic car companies.

The battery is the “heart” of an electric vehicle and also the biggest cost and bottleneck. Currently, the global battery market is mainly dominated by China, Japan, and South Korea, with China accounting for about 60% of the market share. In China, not only do we have leading battery suppliers such as CATL and BYD, but domestic car companies have also established close cooperation with battery enterprises, which can not only ensure battery supply but also reduce costs and improve efficiency. Traditional luxury brands’ performance in this area is obviously not as good as domestic brands.

BYD eight-in-one electric powertrain

In terms of the matching and calibration of the three electric components, traditional luxury brands are obviously not as good as domestic brands. Taking the Audi e-tron, which is currently being sold at half price, as an example, its poor sales performance is not only due to its high price but also its mediocre performance in terms of the three electric components compared to other vehicles in the same class. It is not only a model based on a traditional fuel platform, but also has a NEDC range of less than 500 km for the four-wheel drive version, despite having a 96.7 kWh battery pack.

Product strength is one of the important competitiveness in the new energy vehicle industry, as well as a key factor influencing consumers’ purchase intention and reputation. In this regard, traditional luxury brands not only face challenges from domestic car companies but also compete with emerging electric vehicle brands such as Tesla. As the world’s largest electric vehicle manufacturer, Tesla has established a strong brand influence and loyalty in the Chinese market, and has obvious advantages in product design, performance, and intelligence.

On one hand, Tesla’s product design focuses on simplicity, fashion, and a sense of the future, which aligns with the aesthetic and personal needs of young consumers. Although Tesla currently only offers four models, it covers both the sedan and SUV segments, and both the Model 3 and Model Y have performed well in the domestic electric vehicle market. Many of these new Tesla users may also be or have been users of traditional luxury brands.

The new Tesla Model 3

Tesla’s main characteristics are efficiency, high speed, and long range, which meet the quality and experiential needs of high-end consumers. Tesla is also one of the few car companies that can fully self-develop in the three electric vehicle aspects and has certain advantages. Coupled with Tesla’s positioning as a luxury car, whether it is the product itself or the brand strength, Tesla has a significant advantage over BBA (German luxury car brands) in the field of electric vehicles.

Brand is one of the soft powers in the new energy vehicle industry and an important factor that influences consumer recognition, trust, and loyalty. In this aspect, although traditional luxury brands still have certain advantages, they also face challenges such as changing consumer demands, brand image damage, and lack of brand differentiation.

Traditional luxury brands have established a high-end, luxurious, and prestigious brand image in the era of fuel-powered cars, winning consumer recognition and respect. However, in the era of new energy vehicles, consumer demands and values have changed, with a greater focus on product performance, intelligence, and environmental friendliness, rather than just appearance, price, and status. Traditional luxury brands have not demonstrated sufficient advantages and attractiveness in these aspects, but instead appear outdated, conservative, and lagging behind.

The BBA of the era of gasoline-powered cars

Traditional luxury brands lack obvious brand differentiation and personalization in the new energy vehicle market, making it difficult to form unique brand recognition and associations. For example, traditional luxury brands such as BMW, Mercedes-Benz, and Audi use similar naming methods for electric vehicles, such as the BMW i series, Mercedes-Benz EQ series, Audi e-tron series, etc. In particular, Mercedes-Benz’s naming of electrified brands is even more confusing. After launching the EQS sedan, they directly named the SUV model of the same level as EQS SUV, making it difficult for consumers to distinguish and remember.

In addition, these traditional luxury brands have not formed a clear product style and design language for electric vehicles, and most of them have used elements from gasoline-powered cars, such as the front face, tail lights, and wheels, making it difficult for consumers to quickly differentiate between traditional gasoline-powered cars and new energy models. This design approach that confuses the appearance of new energy and gasoline-powered cars may be able to solve design costs to some extent, but it does not help the new energy brand leave a deep impression in the minds of consumers.

Lastly, and most importantly, even in the era of new energy, traditional luxury brands still price their vehicles according to the pricing methods of gasoline-powered cars. After losing the protection of internal combustion engines, their current approach is no longer effective in the domestic market. Many people jokingly say that the electric cars from BBA are knockoffs. Although the words may sound harsh, looking at sales figures, compared to luxury brand automakers like NIO and Xpeng, they are indeed on the verge of becoming “Others”.

Mercedes-Benz EQS was previously priced with confidence.

From a cost perspective, the manufacturing cost of BBA electric cars is relatively high. BBA has relatively less investment in the field of electric vehicles, lacks economies of scale, and therefore cannot reduce costs through large-scale production like competitors such as Tesla. In addition, BBA electric cars also have problems in terms of research and development, technology, and supply chain, which further increases costs. These also have an impact on the pricing of car companies.

Traditional luxury brands face multiple dilemmas and challenges in the field of new energy vehicles, such as declining market share, insufficient technological strength, weak product power, and damaged brand power. In order to adapt to the changes and demands of the new energy vehicle era, traditional luxury brands should lower their proud heads and change their pricing strategies from the era of fuel-powered vehicles to attract consumers who still have a certain loyalty to BBA by lowering prices. At the same time, they should rely on the huge resources accumulated in the past to accelerate investment in new energy, in order to make up for the gap brought by latecomers. Only by changing the previous practices in terms of technology and price, perhaps they can still find a ray of hope in the increasingly fierce domestic new energy vehicle market.

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