How the MG4 undercuts VW, Peugeot rivals on price
The MG4 electric compact sedan is a competent car but in one area it is revolutionary: its price.
Deliveries have already started in Europe for the China-built model, which MG expects to be its bestseller next year in the UK, the brand’s biggest market in the region.
In Germany, the entry-level MG4 with a 51-kilowatt-hour battery and a range of 350 km (218 miles) starts at 28,240 euros ($28,220).
In contrast, the Volkswagen ID3, the car on which the MG4 was compared, starts at 38,060 euros for the current base variant with a 58 kWh battery and a range of 426 km (an entry version with a 45 kWh has been promised but is not yet on sale).
As for the Peugeot e-208, smaller than the MG4, it starts at 35,350 euros in Germany for its basic version with a 50 kWh battery and 362 km of autonomy.
So how can the MG4 be sold for 7,000 to almost 10,000 euros less than its direct competitors? A key issue to address is the profit margin. Is MG ready to lose money to gain market share during its growth phase?
The SAIC-owned brand said that was not the case. He claims he is making a profit at this price, although he is clearly looking for market share at a time when his rivals are more limited in supply.
“We are valuing to get a margin that we are comfortable with and that gives us enough traction to hit sales targets,” UK commercial director Guy Pigounakis said. Automotive News Europe.
Assuming MG and SAIC aren’t selling at a loss to increase share, one of the keys to keeping the price down is the battery. The 51 kWh pack and the larger 62 kWh version use lithium iron phosphate (LFP) batteries supplied by CATL.
This provides a cost advantage over competitors who use the more expensive Nickel-Manganese-Cobalt (NMC) battery chemistry.
A recent teardown of CATL’s LFP battery usage in Shanghai-built versions of the Tesla Model 3 overseen by UBS bank analysts found the CATL solution to be the world leader in battery costs of $131 per kWh , ahead of BYD’s Blade LFP battery at $134 per kWh.
UBS has calculated that the use of the LFP allows a saving of 9% compared to an NMC cell.
MG has also cut costs by eliminating a layer of packaging by rolling out a form of battery manufacturing called cell-to-pack. The technique reduces costs and minimizes layer thickness to just 110mm. That’s thinner than VW’s claimed 140mm thickness for its electric MEB platform.
The MG4 is the first SAIC model to use the company’s new Modular Scalable Platform (MSP) which it says will underpin a range of models, in the same way that MEB already underpins several of the group’s electric cars. VW.
MG highlights the cost savings that a common platform brings, compared to current EV models. For example, the ZS EV small SUV is built on a converted combustion engine platform and is now mainly sold in Europe, with sales in China declining.
“The MG4 is a global car, which brings us huge economies of scale,” said Pigounakis.