A $7,000 Midsize SUV? CEO Says It’s Closer Than You Think

The boss of Leapmotor, in which Stellantis holds a 20% stake, says build costs will tumble, much like they have for electronic devices such as big TVs

                                        https://www.carscoops.com/author/chris-chilton-cc/                                    

How much would expect to pay for shiny new midsize or large SUV? Around $40,000 at best, and perhaps as much as $70k, right? Now imagine bagging something like that for just $7,000, the kind of money that right now would get you into a 15-year-old Toyota Corolla with almost 200,000 miles (320,000 km) on the odometer.

It sounds absurd, but one senior auto exec thinks it’s a real possibility. Not in the US or Europe, unfortunately, but in China, where the auto industry is on the verge of imploding due to a price war that will inevitably wipe out multiple brands over the next few years.

Why Leapmotor’s Boss Thinks Costs Will Tumble Down

Leapmotor CEO Zhu Jiangming said in a recent interview that it would be “reasonable for automakers to sell a mid-to-large SUV for 50,000 yuan (7,000 USD)” in the future. Those are the kind of numbers that would make a Western car boss like Ford’s Jim Farley laugh out loud – and, in the future, probably burst into tears at the prospect of a possible takeover. And remember, Stellantis, the parent company of Jeep, owns 20 percent of Leapmotor.

Also: EV Discounts Hit Record High In China And That’s Bad News

Just ask the likes of Volvo or MG, to name but two legacy brands that were bought, and saved, by the Chinese. Or Jaguar and Land Rover, two of the British crown’s jewels, that are owned by Tata Motors (whomever said history is not without a sense of irony was dead right). Sadly for Saab that was condemned under GM’s stewardship, its own rescue attempt was too little, too late; then again, in the industry, we’ve learned to never say never…

Cars As White Goods? But Of Course They Are!

Back to Zhu Jiangming’s claims. One may dismiss them how much they want, but he has some proven case studies from other industries to back up the theory. It’s all to do with how advancing technology and the integration of chips could radically reduce the build costs for modern vehicles. Zhu cited the case of electronic products such as big 100-inch TVs, which now sell in China for less than $850, CarNewsChina reports. Or air conditioning units that can now be bought for just over $150.

Leapmotor still has some way to go before it can start advertising BMW X5-sized SUVs for $7,000. Its six-seat C16 costs from $24,000-27,000, Autohome says, yet it’s already a bargain by US pricing standards.

You Want A Battle? Here’s A War

Zhu’s comments will no doubt have been met with some serious eye-rolling by Wei Jianjun, CEO of rival carmaker Great Wall Motor. He recently warned about the dangers of China’s auto price war, suggesting the industry had its own version of Evergrande, the Chinese property developer that went bust last year.

Wei didn’t name the company but following online speculation that he’d been referring to BYD, who recently cut the price of its Seagull EV to less the equivalent of $7,700, that firm’s general manager Li Yunfei publicly refuted the idea the country’s auto sector was in crisis.

Buckle Up Dorothy, Cause Market Share Is Going Bye-Bye

That remains to be seen, but some things are already clear. First, the Chinese are on a roll, and the rest of the world is already considering them to be an existential threat. The switch to electrification all but eliminated any advantages established automakers had during the ICE period (if you’ll excuse us the pun) and leveling up the playing field.

And with competitive products and significant price advantages on their side, brands from the People’s Republic are laughing all the way to the bank.

Also: Toyota’s New Model Y Rival Just Launched In China For Less Than A Used Corolla

Sure, there will be some form of consolidation among them, but that will be little comfort to Western companies that seem to be fighting a losing battle. Even US President Donald Trump, who initiated a head-on collision, soon realized that this course of action wouldn’t work against China anyway, so he seems to have backtracked .

This leaves Europe, which has close to no bargaining chips and is already facing financial turmoil, as the one likely to be left standing in this round of musical chairs. Its biggest player by far, the VW Group, is in all hands on deck mode as it fights in multiple fronts to ensure it survives with as less damage as possible.

What about Stellantis, you ask? Well, if you’ve been reading the news lately you must have gotten the general picture – but the details are a different story worth another, rather big, article…

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