Chinese Cars
Chinese cars are coming, so will they take over the entire car industry. That’s what we’re going to find out.
Tesla has dominated the electric car market for the past decade, but those days might be coming to an end.
Competition from China is heating up and threatens Tesla’s EV dominance.
Chinese automakers have been making headlines for a while now and some are concerned that they pose a very serious threat, not just to Tesla, but potentially the entire auto industry.
BYD: A Major Player Emerges
The largest Chinese automaker is BYD, an automaker that now holds the title of the world’s largest EV manufacturer.
Could BYD and other Chinese automakers really take over the entire auto market and are they an option that’s potentially worth considering in the near future? Well, before we answer that, let’s first take a look at where BYD came from.
BYD, which stands for Build Your Dream started as a battery manufacturer in the 1990s, but has rapidly grown into a major automobile powerhouse, one that’s even heavily backed by Warren Buffett’s, Berkshire Hathaway.
Global Expansion and Growing Influence
They produced over 3 million plug-in hybrid vehicles and electric vehicles in 2023 with a massive 11% market share in China and 40% share of the EV market, which is very impressive considering that China is the world’s largest and the most competitive auto market.
BYD famously overtook Tesla in the last quarter of 2023, stealing their thunder as the world’s largest EV automaker.
Their dominance over Tesla in this market is quite fascinating, especially considering how Elon Musk dismissed and even poke fun at the company quite famously, nearly a decade ago.
And look how things have changed.
Which Car Brands Are Worth Your Money
Now Warren Buffet and Charlie Munger have been quoted saying how it’s almost ridiculous how much BYD is beating Elon Musk, Tesla and BYD is not only dominating in China, but they’re rapidly expanding all around the globe now selling their vehicles everywhere from Europe to Australia and even parts of North America.
Their exports grew to nearly a quarter million vehicles in 2023, and some experts predict that BYD will become one of the top five automakers in the world within the next few years.
This is all thanks to their growing lineup of vehicles, which are nicely designed, competitive in terms of performance and technology, and most importantly of all are extremely affordable to buy.
Competitive Pricing and BYD EV Lineup
BYD tends to undercut its competitors by a significant amount, and they’re remarkably low Prices have even made headlines thanks to their $10,000 electric vehicle, the Seagull, which has created quite the stir among us automakers, and they’re also
Extremely competitive in the vehicle segments between 25 to $35,000 and between 35 to $55,000.
The aggressive pricing of BYD is one major factor that has led to Tesla slashing its prices in 2023 and 2024.
In order to avoid the risk of a huge drop off in sales BYD.
Competitive pricing is partly thanks to their expertise in batteries, which of course are the most expensive part of an EV.
Battery Expertise Driving Success
BYD designs develops and manufactures its own batteries at scale.
They even supply them globally to other automakers and have plans to build battery plants all over the world.
They even revolutionized the battery market with their famous blade style battery system launched in 2020 an LFP or lithium-ion phosphate battery that offers high energy density, high durability, and for a low price.
Tesla has even adopted the same LFP batteries in their least expensive models and General Motors plans to do the exact same thing.
BYD Commercial Vehicle Presence
What’s interesting is that BYD is not just in the passenger car market.
They also build commercial vehicles including trucks and buses, which are actually already built in the US at a factory in California, but passenger cars now make up the bulk of their sales and they have a growing lineup of vehicles for just about every segment.
The vehicle that really put BYD on the map is the Han a German design premium mid-size sedan, similar to the Tesla Model S and part of their more upscale dynasty series of vehicles.
Affordable EVs
And then there’s their Ocean series, which are the more affordable mainstream models.
These include the Seagull, BYD, smallest and most affordable car, and the one with that very famous $10,000 starting price, although very affordable, it is certainly not some stripped down penalty box.
It offers reasonable driving range, good performance, and all the technology and features that consumers expect to find in a brand new vehicle.
Hyundai IONIQ 5 N Review: Speed, Looks, Price & Other Details
There’s also the BYD seal, a small sedan similar to the Tesla model three, which has a starting price around $22,000.
There are also various crossover models such as the BYD dolphin, the Tang, and the Auto, all of which are equally as well equipped and aggressively priced.
While many reviewers would agree that BYD certainly doesn’t do anything groundbreaking or class leading in any particular area in terms of their performance features and technology, they’re able to sell solid cars at a really incredible price point.
Government Subsidies and Market Support
Something other automakers have just not been able to do yet.
In fact, no other automakers have been confident that they can even compete with the vehicle’s BYD is offering,
Which could be a major problem for them in the future.
Elon Musk was even quoted as saying, frankly, I think if there are no trade barriers established, they will pretty much demolish most other automakers in the world.
BYD has worked very hard to simplify their designs and the manufacturing costs in order to make their cars as cheaply as possible without sacrificing the quality too much.
They are able to take advantage of very low labor costs in their home market, and they’re also an extremely vertically integrated company, which allows them to design and build the components of their cars in-house and for comparatively low cost.
And as mentioned before, BYD did get their start as a battery manufacturer, so they have plenty of experience and expertise building batteries at scale.
A lot of critics have been quick to judge the company for their use of heavy subsidies from the Chinese government to artificially lower the cost of their vehicles.
Although it is true that BYD has received around $3.7 billion in direct subsidies from the Chinese government, they are far from the only automaker receiving help.
BYD Future in North America
German, Japanese and American automakers have all received some form of subsidies, whether directly from both the American and Canadian governments to build plants or through the use of rebates and credits to lower the prices of their vehicles.
And in many cases, these subsidies are far, far greater than what BYD has received from the Chinese government.
So singling out Chinese automakers in this area does seem to be somewhat hypocritical.
The big question now is, will BYD sell its vehicles in the US and Canada next? Well, given their rapid expansion across the world, they definitely seem to be preparing for that very soon.
These markets are extremely important for them and they will eventually have to compete and succeed here to thrive.
Challenge of Trade Barriers
The challenge is going to be whether the US will allow them to even compete.
Current tariffs in the US already make it too expensive for Chinese automakers to compete with a 25% tax on Chinese EVs.
And recently the US government announced some sweeping new tariffs quadrupling the 25% tariff to 100%, which just goes to show how afraid the US is of Chinese cars.
Domestic automakers here know how good these Chinese cars are. Elon Musk has said as much according to him, the success hinges on what kind of tariffs and trade barriers are established without any trade barriers.
Well, he believes they will just demolish other car companies around the world BYD already announced that they will build a factory in Mexico possibly to gain a foothold in the North American market. And it seems likely that any tariffs that
Are placed on BYD or other Chinese automakers are not likely to last at best.
Impact on Competitors
All these tariffs will likely do is buy some time for other automakers to step up their game and get ready for all of the incoming competition.
Quite frankly, it seems rather anti-Capitalism of America to try and stop competitors like BYD from entering the market.
Consumers deserve more affordable options, and if it takes a Chinese automaker to make others wake up and build what consumers want, well then perhaps so be it.
On the other hand, however, there is a very legitimate concern that all of the competition from BYD and other Chinese automakers might be so fierce that the only way for other automakers to compete will be to cut every possible corner far more so than they’re already doing and lower the quality of their products to an unacceptable level.
Although I like most consumers do want to see a lot more affordable options, I think we can all agree that we don’t want to see that at the expense of quality and reliability.
And that’s a major concern and a challenge that many automakers are going to have to face.
In any case, BYD is still in the early stages of its global growth, and it is possible that over time they will conquer a winning formula for building cars that are not only super affordable but also very desirable and very well made.
And if they manage to do that within the next few years, it could line up with the time they’re ready to begin selling in the US and Canada.
Consumers’ Choice: Affordability vs. Quality
Many critics will say that consumers here will not be interested in Chinese vehicles.
Well, to that, I say I think if you were to ask many consumers if they would rather purchase a new $25,000 vehicle or a $45,000 vehicle, well many of them will likely take the $25,000 Chinese car. So let me know how you feel about all of this.
Would you consider buying A BYD in the near future, especially if it were 10 to $20,000 less expensive than an equivalent vehicle from another brand? Let me know in the comments.