Brands like BYD, Omoda or Lynk
Despite the relief that purchasing a Chinese car represents for consumers’ pockets compared to a European one with the same characteristics, it must be taken into account that the price paid for that car is two (and even three) times more expensive than in China. China’s leading electric vehicle maker BYD has dramatically increased export tariffs to the point where it charges more than double for three models in five of its largest export markets, Reuters reports.
One of the examples cited by the news agency is that of the BYD Atto 3, a compact electric crossover that is having very good acceptance both in China and in other markets. In its country of origin, the mid-range version of this model sells for the equivalent of $19,283 while, in Germany, the small SUV is priced at $42,789, an amount that is still lower compared to other similar electric vehicles.
In fact, BYD Chairman Wang Chuangfu told investors in a private meeting in March that the company hopes exports will help shore up profitability this year as the price war in the local market prevents it from growing economically. at the expense of sales in their own country.
In general, Chinese companies adopt a strategy of seeking to earn considerable profit margins on exports to compensate for significantly lower prices in their domestic market. In China, local brands barely make any profits due to intense competition in the market. This year alone, Chinese automakers are expected to launch 110 new models of electric and plug-in hybrid vehicles, some of which were showcased at the Beijing Motor Show.
In addition to lowering profit margin expectations in the local market, another key that explains why Chinese cars sell cheaper in their own country is that costs have been rationalized in all phases of the manufacturing process. The price of batteries is 18% cheaper in China than in the rest of the world, according to Benchmark Mineral Intelligence, and labor and industrial land is also much cheaper.
As if that weren’t enough, the government has heavily subsidized domestic and foreign brands that make and sell electric vehicles in China, where electric and plug-in hybrids accounted for more than a third of all new car sales last year.
This cost advantage is what has led some American and European automakers to call for higher tariffs on Chinese electric vehicles, with the goal of leveling competition and protecting their own auto industries. In China, the price of imported vehicles is taxed with 25% tariffs.
But as long as Brussels does not increase tariffs, buying a Chinese car in Europe will generally continue to be a more advantageous option for consumers, even if they are aware that they will pay twice what the vehicle costs in China. Another example cited by Reuters is that of the BYD Dolphin, which in Germany is available for $37,439 and in China, for $16,524, although it must be taken into account that these cars usually reach the European market with a higher level of equipment.
