China’s Super-Cheap EVs Offer Hope for Average American Buyers

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China’s Super-Cheap EVs Offer Hope for Average American Buyers

By Keith Naughton | Bloomberg Businessweek | March 18, 2024

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No American car buyer today can purchase a Chinese brand’s electric vehicle. And no one is really sure when these EVs will arrive on US shores. But the prospect of cheap Chinese-made EVs is already causing sleepless nights in Detroit. The primary threat comes from cars such as BYD Co.’s Seagull hatchback.  The car’s most extraordinary feature is its $9,698 price tag. That undercuts the average price of an American EV by more than $50,000 (and is only a little more than a high-end Vespa scooter). Such aggressive pricing by BYD, which surpassed Tesla Inc. in late 2023 to become the world’s largest producer of electric vehicles, is indicative of how Chinese auto manufacturers will likely force US makers to pivot away from mainly producing expensive second cars for the affluent and toward more reasonably priced EVs for the Everyman.

Just as the long-feared prospect of a revolutionary EV from US tech giant Apple Inc. has receded, American carmakers now face a possibly greater challenge from Asia. China, long a manufacturing hub for Western companies’ products, is hellbent on expanding its own companies’ reach around the globe. It’s already the biggest market for EVs, and it’s using that scale and manufacturing know-how to help expand sales of competitively priced Chinese models to an increasingly climate-conscious world.

For now, the Chinese onslaught is being kept at bay in America by stiff tariffs and moves to erect even tougher trade barriers against the US’s geopolitical adversary. But the Chinese market accounts for about 70% of all EVs sold globally, so China’s push to lower prices is causing a ripple effect that can’t be ignored in the long term—even if political maneuvering by American lawmakers manages to slow the Asian giant’s automotive advance toward the US, the world’s most profitable car market.

Ford Motor Co., Tesla and other carmakers are quickly tearing up their EV playbooks to compete against these cheap new vehicles sold outside the US. Ford Chief Executive Officer Jim Farley calls the Seagull “pretty damn good” and cautions that any automaker that can’t compete with the Chinese globally in the near future risks losing as much as 30% of its revenue. One of Farley’s top EV executives called Chinese EVs “a colossal strategic threat.”

American carmakers express fear that China is setting a new global standard—one they can’t ignore. Chinese brands already have established footholds in key regional markets including Europe, Mexico and the Middle East, and they’re keen to keep growing.

Western carmakers are struggling to boost demand for their own battery-powered models. Ford and GM have recently slashed EV production because of slowing demand brought on in part by high prices, hardware and software glitches marring rollouts, and consumer concerns about America’s spotty charging infrastructure.

3 key takeaways from the article

1. No American car buyer today can purchase a Chinese brand’s electric vehicle. And no one is really sure when these EVs will arrive on US shores. But the prospect of cheap Chinese-made EVs is already causing sleepless nights in Detroit. 
2. The primary threat comes from cars such as BYD Co.’s Seagull hatchback.  The car’s most extraordinary feature is its $9,698 price tag. That undercuts the average price of an American EV by more than $50,000 (and is only a little more than a high-end Vespa scooter). 
3. Such aggressive pricing by BYD, which surpassed Tesla Inc. in late 2023 to become the world’s largest producer of electric vehicles, is indicative of how Chinese auto manufacturers will likely force US makers to pivot away from mainly producing expensive second cars for the affluent and toward more reasonably priced EVs for the Everyman.

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Topics:  Cars, China, USA, Competitiveness