Affordable electric vehicles from China are gaining traction in Europe, presenting a challenge to the region’s automotive industry, as reported by Bloomberg.
BYD Co, the largest global EV maker, is set to introduce its Seagull hatchback in Europe next year. With premium features like a rotating touch screen and wireless phone charging, the Seagull is priced under $10,000 in China. Despite tariffs and adjustments for European standards, BYD aims to sell the Seagull for less than €20,000 in Europe.
This competitive pricing places the Seagull well below electric models from companies such as Stellantis NV and Renault SA, which are crucial for these automakers’ shift to electric vehicles. The upcoming launch of the Seagull adds pressure on European automakers to retain their market share in the evolving post-combustion engine era, especially in light of the ongoing anti-subsidy investigation by Brussels.
“We are closely monitoring this model and others from Chinese EV manufacturers,” said Martin Sander, head of Ford Motor Co.’s European EV business. “Naturally, we are concerned when new competition enters the market,” he shared with Bloomberg.
The Seagull has garnered praise for its construction quality, design, and technology. BYD plans to introduce a higher-end €25,000 EV before bringing the Seagull to Europe, as per Michael Shu, BYD’s European Managing Director, at an industry event in London. Additionally, BYD’s establishment of two plants in the region will help navigate potential European Union tariffs.
Success in Mexico
The Seagull, known as the Dolphin Mini in Mexico, has attracted significant interest in the country despite its fledgling charging infrastructure. “Mexico initially posed challenges for us, but ultimately we found high demand and enthusiasm for this model,” remarked BYD Executive Vice President Stella Li during an event unveiling a plug-in hybrid pickup for the Mexican market, according to Bloomberg.
BYD leads a wave of Chinese automakers expanding their exports after dominating the domestic market. Elon Musk, CEO of Tesla, cautioned in January that Chinese carmakers could outshine most competitors if trade barriers were not implemented.
Trade tensions?
While US President Joe Biden has raised tariffs on Chinese EVs, essentially blocking imports, Europe faces a more intricate situation. European automakers heavily rely on the Chinese market, making them susceptible to retaliatory actions. Beijing recently hinted at imposing tariffs up to 25% on imported cars with large engines, which could significantly impact companies like Mercedes-Benz Group AG and BMW AG.
Europe’s strategy to phase out combustion-engine vehicles necessitates affordable EVs to drive mass adoption. The EU’s investigation into China’s EV industry is nearing a decision on tariff adjustments, although some industry experts warn against protectionism. “Tariffs should not be used to shield our leading manufacturers from healthy competition,” remarked Julia Poliscanova, senior director for vehicles and e-mobility supply chains at Transport & Environment.
Founded in 1995 as a battery manufacturer, BYD expanded into automobiles in 2003. The company began selling passenger cars in Europe three years ago and has been making waves at auto shows in Paris and Munich. Despite a 23% decline in 2023, BYD shares have climbed 9.6% this year, as reported by Bloomberg.
European automakers are exploring partnerships to combat the challenge. Renault is seeking collaborators to reduce costs on a small-car platform, while Stellantis is gearing up to sell vehicles produced through its joint venture with China’s Zhejiang Leapmotor Technologies Ltd starting in September.
“We have no intention of leaving this price segment open to our Chinese rivals,” stated Stellantis CEO Carlos Tavares, dismissing calls for tariffs. “We believe that protectionism is not a sustainable solution to this competition,” Bloomberg highlighted.
Stellantis’ collaboration with Leapmotor, established in October, leverages China’s cost advantages and advanced EV technology. This partnership helps counteract the support Chinese EV makers receive from their government. While Chinese brands held approximately 7% of Europe’s electric market last year, Transport & Environment forecasts this could rise to 11% in 2022 and 20% by 2027.
The Seagull’s influence is substantial. Caresoft Global, a Michigan-based engineering firm renowned for assessing vehicle quality and manufacturing techniques, commended the Seagull for its cost-effective design. “The industry should take a serious look at this car because it’s truly remarkable,” remarked Caresoft President Terry Woychowski to Bloomberg.
Is the EU embarking on a trade dispute with China?
Volkswagen cautions against tariff hikes on Chinese electric vehicles
How the hubris of German automakers led to Europe’s Kodak moment
How will the increased tariffs on Chinese EVs by Biden affect car financing in Europe?
