EU’s unwinnable price war with Chinese EVs summed up—BYD cars are 11 times more profitable in Europe than in China

As a fleet of vessels ship ultra-cheap electric vehicles like BYD into Europe from China, helpless European carmakers have watched on begging for regulators to save them from a price war they can’t possibly win.

The EU is expected to slap tariffs on Chinese automakers following a probe into anti-competitive practices after carmakers were left in a “state of shock” by BYD’s affordable cars.

Research from Rhodium Group has put a number on the size of the size of tariff required to put a halt to China’s EV advance into Europe. Unfortunately for native carmakers, that figure is much higher than what is expected to be implemented by the EU.

In January, the European Commission said it planned to visit top Chinese carmakers, including BYD and Geely, as part of a probe into China’s alleged anti-competitive practices linked to state-backed subsidies provided to the manufacturers.

It followed comments made by European Commission President Ursula von der Leyen last September where she accused China and its carmakers of market distortion, which led to an official probe being launched in October.

Chinese EVs have enjoyed a number of advantages over Western automakers. BYD, for example, has control over its entire supply chain, with its battery supply being a huge advantage.

It has helped them eke out market share in Europe at a frantic pace.

EU imports of Chinese EVs jumped from $1.6
billion in 2020 to $11.5 billion in 2023, Rhodium writes. Chinese EVs are expected to account for a quarter of all EVs sold on the continent this year, campaign group Transport & Environment found.

Rhodium Group put into numbers the extent of the challenge facing native automakers, using BYD’s affordable Seal U car as an illustrative example.

The car sells for €20,500 ($21,950) in China and €42,000 ($45,000) in the EU.

Chinese automakers are moving to extract higher profits in Europe as a price war back home pushes their margins to the floor. This pricing mechanism means the Seal U makes BYD a €14,300 ($15,300) profit in the EU, but just a €1,300 ($1,400) profit in China.

Ref: EU’s unwinnable price war with Chinese EVs summed up—BYD cars are 11 times more profitable in Europe than in China (finance)