The Concerning Impact of a Small China-Made EV on Global Auto Executives and Politicians

The global automotive industry is facing a concerning impact due to the rise of a small China-made electric vehicle (EV), the BYD Seagull. What sets this EV apart is not just its low price, starting at less than $10,000, but also its potential to disrupt domestic auto industries worldwide. The profitability of the Seagull in contrast to the struggles of U.S. automakers to turn a profit on EVs has caught the attention of automotive executives and politicians alike. As Chinese automakers expand into Europe, Latin America, and other regions, there is a growing fear that they could flood the markets, undercutting domestic production and vehicle prices.

While the Seagull is not yet available for sale in the U.S., BYD’s global expansion suggests that it may only be a matter of time before more China-made vehicles arrive on American soil. This prospect worries global automakers who believe that Chinese rivals, backed by the power and funding of the Chinese government, could pose an existential threat to the U.S. auto sector. The Alliance for American Manufacturing, a U.S. manufacturing advocacy group, warns that the introduction of cheap Chinese autos to the American market could have an extinction-level impact on the U.S. auto industry.

BYD’s success is evident in its sales numbers. It sold 1.57 million battery EVs last year, surpassing Tesla and becoming the world’s largest producer of electric vehicles. The rise of BYD and other Chinese automakers has prompted Tesla CEO Elon Musk to caution that Chinese automakers could “demolish” global rivals without trade barriers. Bernstein reports that BYD’s growth has come from shipping more vehicles outside China, with overseas markets accounting for about 10% of its sales last year.

The BYD Seagull may not match the range or top speed of many EVs currently on sale in the U.S., but its construction, batteries, and sourcing of parts make it an efficient and cost-effective option. Engineering consulting firm Caresoft has benchmarked the Seagull and found it to be well-designed and executed, with unexpected quality and anticipated reliability. Despite its low price, BYD still manages to make a profit on the Seagull.

For BYD to sell the Seagull in the U.S., it would have to meet additional U.S. federal vehicle requirements, which would add costs to the car. However, even with these additional costs, the Seagull could still arrive in the U.S. at a significantly lower price than the average EV. BYD recently announced its plans to sell the Seagull in Mexico for a price equivalent to about $20,990.

BYD’s success can be attributed to its battery technology, internal sourcing, and production of parts. The company has developed lower-cost battery technologies that are cheaper to manufacture than the lithium-ion batteries commonly used in U.S. EVs. BYD’s focus on vehicle efficiencies is reminiscent of Tesla, which has been able to drive down the cost of its vehicles over the years.

Traditional automakers are now attempting to emulate some of Tesla’s processes, such as its gigacasting manufacturing process and vertical integration of crucial parts. However, Chinese automakers like BYD are quick to adapt and roll out new products. They have also established manufacturing facilities in various countries, posing a growing threat to global counterparts.

The rise of Chinese automakers comes at a challenging time for traditional automakers in the U.S., who have seen their market share decline over the years. Politicians in the U.S. and Europe have expressed concerns about Chinese imports and have taken steps to protect their local auto industries. There are suggestions of increasing tariffs on Chinese vehicle imports and imposing tariffs on cars made in Mexico by Chinese companies.

To compete with Chinese brands like BYD, traditional automakers must be willing to learn, unlearn, and change quickly. They need to rethink century-old procedures, standards, and workflows to better compete against Chinese automakers. It is no longer appropriate to continue doing things the same way just because they have been done for a long time.

In conclusion, the rise of the BYD Seagull and other China-made EVs is causing concern among global auto executives and politicians. The low price and profitability of the Seagull highlight the potential threat that Chinese automakers pose to domestic auto industries worldwide. As Chinese automakers expand globally, there is a fear that they could flood markets, undercutting domestic production and vehicle prices. Traditional automakers need to adapt quickly to compete with Chinese brands and protect their market share. The future of the global automotive industry may well be shaped by the impact of small China-made EVs like the BYD Seagull.