(Bloomberg) — Cheap electric cars made in China are already making their way to Europe, undermining one of the region’s biggest industries. BYD, which overtook Tesla as the world’s largest EV maker late last year, is looking to increase its stake.
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The Chinese manufacturer last month announced plans to bring the Seagull hatchback to Europe next year. The car has premium features such as a rotating touch screen and wireless phone charging, and sells for less than $10,000 in China. Even after tariffs and modifications to meet European standards, BYD executives expect the Seagull to sell for less than 20,000 euros ($21,500) in continental Europe.
That would make the four-seater thousands of dollars cheaper than the electric runabouts that the likes of Stellantis NV and Renault SA hope will bridge the energy transition. Its impending arrival is gradually increasing pressure on European automakers to dominate the post-internal combustion engine era. Anti-subsidy investigations by the City of Brussels are unlikely to erase this threat.
“We are looking very closely at this model and other models from Chinese EV manufacturers,” said Martin Sander, head of European EV operations at Ford Motor Company. “Of course, we get nervous when new competitors enter the market.”
The Seagull has earned BYD accolades for its build quality, design, and technology for the price. And it’s not a one-time thing. The company plans to introduce a higher-end 25,000 euro electric vehicle before the city car, European managing director Michael Hsu said at an industry event in London this month. BYD’s plans to build two factories in the region will help cushion the impact of European Union tariffs aimed at slowing its progress.
This model has already been well received overseas. In Mexico, where the car is called the Dolphin Mini, drivers have been using the 358,800 pesos ($19,780) car since its February launch, despite a patchy charging infrastructure that is still in its infancy. There is a rush.
BYD Vice President Stella Li announced the plug-in hybrid pickup at an event in the capital last week, saying, “Mexico is not a good country for us, but we ended up finding a lot of demand and enthusiasm.” ” he said. For the Mexican market.
BYD is at the forefront of Chinese automakers increasingly targeting exports after dominating their home market. Tesla CEO Elon Musk warned in January that Tesla would “almost crush” most other automakers if trade barriers were not erected.
President Joe Biden has set out to nearly quadruple U.S. tariffs on Chinese EVs, effectively closing the door on their imports, but the tariffs are more complicated for Europe. Automakers in the region are more dependent on the Chinese market than their American counterparts, making them vulnerable to retaliatory measures from Beijing. Europe’s plan to phase out sales of internal combustion engine cars also requires cheaper cars to increase mass-market adoption.
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The EU launched an investigation into China’s EV industry last year and is close to deciding to raise taxes, but some industry executives and experts are opposed.
“Tariffs should not be used to protect major manufacturers from meaningful competition,” said Julia Poliskanova, senior director of vehicle and e-mobility supply chain at lobby group Transport and Environment. “In addition to important climate goals, it is important to actually secure local jobs and ensure that decarbonization does not lead to deindustrialization.”
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BYD was founded in 1995 and started manufacturing batteries, expanding into the automotive sector in 2003. It began selling passenger cars in Europe three years ago and attracted attention at both the Paris and Munich auto shows. BYD stock is up 9.6% this year after falling 23% in 2023. For now, leading the charge is former British brand MG Motor, which has spent years rebuilding its dealer network and customer base since its acquisition by SAIC in 2007. Currently, the second best-selling EV in the UK after Tesla’s Model Y is the Chinese-made MG4.
Incumbent European automakers are considering unconventional measures to meet this challenge, including new alliances. Renault is openly scouting partners to reduce costs for its small car platform, while Stellantis plans to start selling cars made through a joint venture with China’s Zhejiang Leap Motor Technologies in September.
“We’re not going to open up this price range to Chinese competitors,” Stellantis Chief Executive Carlos Tavares said last week about the upcoming European launch of the Seagull, rejecting calls for tariffs. “I don’t think protectionism is going to give us a way out of this competition in the long term.”
Mr. Tavares has long emphasized moving quickly to counter adversaries. The deal with Leap Motor, signed in October, will allow Jeep and Peugeot owners to benefit from China’s cost advantages and advanced EV technology, while the US and EU will be propped up by unwarranted government aid. He claims to have come. The overall share of Chinese brands in the European electricity market was around 7% last year, but the Ministry of Transport and Environment predicts it will reach 11% this year and 20% by 2027.
Judging by the reviews, established car manufacturers in Europe and the United States are right to take the Seagull seriously. Caresoft Global, a Michigan engineering firm that disassembles vehicles to assess quality and manufacturing techniques, took a close look at the Seagull to assess cost-saving details in its construction.
“This car should be seriously talked about by everyone in the industry, because it’s truly an amazing car,” Caresoft president Terry Wojchowski said in a video posted to InsideEVs. “This car changes the definition of cheap and cheap, which is ‘just sell cheap things.’ This doesn’t look like that at all.”
–With assistance from Monica Raymunt, Kelsey Butler, Danny Lee, and Craig Trudell.
(Updated BYD stock in paragraph 12)
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