How Chinese manufacturer BYD plans to capture the European market with its low-cost electric cars

Are we experiencing the greatest upheaval in the automobile industry since Fordism? This time it is not a question of repetitive and alienating tasks imposed on workers, but of restructuring the offer. In the market, for several years we have witnessed a silent attack by Chinese manufacturers and their electric batteries, which European and American automobile flagships may find difficult to follow.

In pole position in this electric race is BYD, an acronym for “build your dreams”. Based in Shenzhen, the manufacturer is expected to sell more than 3 million electric and hybrid vehicles in 2023, overtaking American Tesla, which has been the leader for several years. In 2024, BYD is expected to overtake Tesla in the electric market alone, as well as the Volkswagen Group in China’s domestic market.

Founded in 1995 by Wang Chuanfu, the company has long been limited to battery production, specifically for Motorola. But in recent years, BYD has experienced unprecedented growth in the sector, rooted in its low-cost manufacturing model. With less than five hours to build a vehicle and complete control over battery production, the firm plans to monopolize the world’s roads.

“BYD Explorer No. 1, Cargo Ship Fueled by Heavy Fuel Oil, Dumps Several Thousand “Clean” Vehicles in Europe

“China produces 60% of the world’s electric vehicles”, Chinese Prime Minister Li Qiang boasted during the annual session of parliament in early March. The government, which wants 50% of car sales to be electric by 2025, heavily subsidizes manufacturers. If BYD announces $2.6 billion in aid between 2008 and 2022, the actual amount could be much higher. Enough to promote the conquest of foreign roads.

Since the invasion of Ukraine, Russia has seen European manufacturers desert, and so it has turned east, becoming the first destination for Chinese vehicles. BYD also has assembly lines in Brazil, Thailand and Uzbekistan, with Mexico and Indonesia awaiting. But it is the older continent, where China already sells 40% of its electric stock, that manufacturers are eyeing.

On February 21, 2024, the “BYD Explorer No. 1” was the first cargo ship of the manufacturer – which built eight of its own cargo ships for fear of not being able to sell its large production to reach European shores. This cubic monster, powered by heavy fuel oil, spawned thousands of “clean” vehicles in the Netherlands, then in Bremerhaven, in Germany, in Vlissingen. Chinese leadership begins in Europe, where new registrations of electric and hybrid vehicles should outpace thermal engines in the coming months. It is estimated that electric cars will account for 80% of the European automobile market in 2030 (compared to 14.6% today) before thermal sales are banned in 2035.

But Twenty-Seven takes a dim view of this Chinese escape. “Global markets are now flooded with cheap Chinese cars”, accused Ursula von der Leyen in September 2023. The president of the European Commission immediately launched an investigation into alleged unfair competition in the Chinese auto sector, driven by state subsidies. Brussels is also considering raising customs for it.

And in the end, China wins?

To reach Europe without paying tolls, Chinese manufacturers like Great Wall Motors or Seik Motor want to set up factories there. Here again, BYD has started. In December, the firm announced the opening of a factory in Szeged in Viktor Orbán’s Hungary. Despite more expensive labor, the Hungarian model should cost 25% less than average, according to Swiss bank UBS. BYD is also in contact with another far-right government: Giorgia Maloney’s Italy, which wants to attract a Chinese firm to end the monopoly of the conglomerate Stallantis (Fiat-PSA-Opel).

The Shenzhen manufacturer is also planning to expand its network with 500 European points of sale in 2024. Enough to undermine the “industrial pillar of the EU: the automobile and its 12 million jobs”, MEP (GRS) Emmanuel Mourel “Humanity”, a sector that accounts for 7% of the European economy.

Chinese manufacturers could also circumvent the Trump and Biden administration’s US sanctions through neighboring Mexico, where they already sell 25% of vehicles. It’s enough to give Tesla owner Elon Musk a cold sweat, who fears his opponents will “take down most other companies in the world”… while the libertarian billionaire calls for a protectionist state.

If China defies Western sanctions, it knows it can run wild on the electric market: the world’s second-largest economy has its hands on most of the minerals and rare earths needed to produce batteries.