China’s electric vehicle, priced below €20,000, is set to hit the European market

Low-cost Chinese electric vehicles are beginning to infiltrate the European market, potentially throwing a wrench in the plans of one of the area’s major sectors. BYD, which outperformed Tesla in late 2020 to become the top global producer of EVs, is escalating its efforts.

Last month, the Chinese firm revealed its intention to introduce their Seagull hatchback to Europe in the coming year. The vehicle, packed with high-end features such as a spinning touch screen and cordless phone charging, retails at less than $10,000 (€9,200) in its home country.

BYD anticipates that, even accounting for European-standard modifications and tariffs, the Seagull’s selling price will remain under €20,000 in Europe.

This pricing strategy places the Seagull significantly below electric competitors from Stellantis, Renault and others that are expected to facilitate their shift towards more sustainable energy. European vehicle producers are feeling the heat as the race for supremacy in the post-internal combustion era accelerates. A subsidy inquiry by Brussels is not anticipated to mitigate this Chinese threat.

Martin Sander, director of Ford Motor Co’s European EV operations, admits to anxiously monitoring this emerging competition from Chinese EV manufacturers. “Of course, we are nervous when new competitors enter the market,” Sander conceded.

The BYD Seagull has earned praise for its superior construction quality, sleek design, and advanced technology, especially considering its affordable price. And this isn’t just a solitary achievement: BYD intends to roll out a higher-end €25,000 EV in advance of the Seagull. Meanwhile, their development of two factories within Europe will enable them to dampen the impact of potential EU tariffs intended to hinder their progress.

Overseas, the model is already a success. In Mexico, where it’s marketed as the Dolphin Mini, the $19,780 vehicle has experienced a surge in popularity from drivers, despite the nation’s still-developing charging infrastructure, since its February unveiling.

Mexican demand for the vehicle has superseded BYD’s expectations. “It’s not great for us, but in the end, we found a lot of demand, a lot of heat for this,” shared BYD’s Executive Vice-President Stella Li at a recent promotional event in the capital that saw the launch of a plug-in hybrid pickup for the Mexican market.

BYD, a Chinese automaker, is leading the charge among Chinese manufacturers aiming to expand their exports after dominating their domestic market. In January, Tesla CEO Elon Musk cautioned that these Chinese manufacturers could “essentially demolish” a majority of their competitors unless trade restrictions were imposed.

Although US president Joe Biden has increased US tariffs on Chinese electric vehicles (EVs) nearly four times, effectively blocking these imports, the tariff situation in Europe is more complex. European car manufacturers are more reliant on the Chinese market compared to their American equivalents, rendering them susceptible to potential retaliatory steps. On Wednesday, Beijing hinted at introducing tariffs up to 25 per cent on imported vehicles with large engines. This tariff imposition could particularly affect Mercedes-Benz Group and BMW.

Furthermore, Europe’s strategy to phase out combustion-engine vehicles demands more affordable cars to facilitate mass adoption. After initiating an investigation into China’s EV industry last year, the EU is contemplating increasing levies, although industry leaders and experts have expressed their reservations. Julia Poliscanova, senior director for vehicles and e-mobility supply chains at lobby group Transport & Environment, remarked that tariffs should not shield lead manufacturers from genuine competition. She emphasised that the focus should include sustaining local jobs without causing deindustrialisation in the pursuit of decarbonisation.

Established in 1995, BYD initially produced batteries and gradually moved into auto manufacturing in 2003. With a presence in the European market for three years, it had significant showcases at the Paris and Munich auto shows. At present, the charge is led by the former British brand, MG Motor, which has spent years rebuilding its dealer network and customer base after it was acquired by Shanghai Automotive Industry Corp in 2007. It now boasts of the UK’s second most popular EV, the Chinese-made MG4, following behind Tesla’s Model Y.

Faced with this emerging competition, existing European car manufacturers are contemplating unconventional strategies, such as creating new alliances. Renault is actively seeking partners to reduce costs on a small-car platform, whilst Stellantis plans to launch vehicles in September manufactured via its partnership with China’s Zhejiang Leapmotor Technologies.

Stellantis CEO, Carlos Tavares, expressed firm intentions last week not to leave a window of opportunity for Chinese rivals on the upcoming model, European Seagull. Tavares dismissed the idea of tariffs, believing protectionism is not a sustainable solution for the competition faced.

Always quick in responding to competitors, Tavares has previously made a deal with Leapmotor in October. It allows the proprietors of Jeep and Peugeot to utilise China’s cost advantages and innovative electric vehicle (EV) technology. The technologies have been claimed by the US and EU to be unfairly bolstered by governmental support. Chinese brand share in the European EV market was approximately 7% in the previous year. However, according to Transport & Environment, it is estimated to increase to 11% this year and could potentially reach 20% by 2027.

The European Seagull is a model that existing car manufacturers in Europe and the US are advised to take seriously, based on expert reviews. Michigan-based engineering firm Caresoft Global, known for comprehensive vehicle analysis, examined the European Seagull’s cost-effective manufacturing elements.

Caresoft’s president, Terry Woychowski, shared his thoughts on InsideEVs, stating “Every industry player should take note of this car because it truly stands apart.” He went on to describe the model as redefining the notion of ‘cheap and cheerful’, acknowledging that the car doesn’t give the impression of being ‘cheap’ at all. – Bloomberg

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