Net zero ban on petrol cars means EU and Britain cannot compete with China, says BMW chief

A net zero ban on petrol and diesel cars means European car makers risk being wiped out by cheaper Chinese competition, the chief of BMW has warned.

Oliver Zipse said mid-market manufacturers in Britain and the EU would be unable to compete with Chinese rivals on price when it came to electric cars.

Mr Zipse told the Financial Times: “The base car market segment will either vanish or will not be done by European manufacturers. I want to send a message: I see that as an imminent risk.”

Chinese manufacturers can make electric cars much more cheaply than European competitors since the country started building its lithium battery production industry much earlier than rivals.

The average price of an electric car in China was less than €32,000 (£27,300) last year, compared to €56,000 in Europe, according to research by Jato Dynamics.

The cheapest Chinese EV, the BYD-made Seagull, costs less than £8,000 for Chinese customers, while the cheapest European-made EV available in the UK is the Fiat 500 at £28,195.

Comparison is not perfect, since Europe has stricter safety standards.

The gulf in price has led to concerns that looming bans on petrol and diesel cars in the EU and UK will effectively hand the market for affordable cars to Chinese manufacturers.

The sale of new petrol and diesel cars will be banned in Britain from 2030 and from 2035 in the EU.

Mr Zipse said his concerns were focused on the cheaper end of the market, rather than higher-end manufacturers such as BMW. Luxury manufacturers can better protect their business thanks to higher margins and the value of their brand.

His comments come weeks after China’s biggest electric carmaker called on the country’s auto industry to unite and “demolish” the competition.

BYD’s founder Wang Chuanfu said the “time has come for Chinese brands”.

Former Aston Martin chief executive Andy Palmer has said manufacturers in Europe and the US face a “real and present danger” from the rise of Chinese competitors.

Renault and other mass-market manufacturers have admitted they cannot compete with price cutting by rivals including BYD, which is backed by billionaire US investor Warren Buffett, and Elon Musk’s Tesla.

Renault’s head of engineering Gilles Le Borgne told reporters at the The International Motor Show in Munich, Germany: “The good strategy is to maintain prices and to adjust fixed costs.”

BMW has put some of its financial firepower into hydrogen fuel as an alternative to battery-powered cars, since this technology is less reliant on lithium and other hard-to-come by battery parts.