Automotive News Europe — 2024-05-22
Automotive Industry
Even after tariffs and modifications to meet European standards, BYD executives have pledged to sell the Seagull for less than €20,000.
Cheap electric vehicles from China are already pushing into Europe, undercutting one of the region's biggest industries. BYD, which overtook Tesla in 2023 to become the biggest global EV maker, is about to raise the stakes.
The Chinese manufacturer last month announced plans to introduce its sub-$10,000 Seagull hatchback in Europe in 2023, offering features such as cruise control and wireless phone charging normally seen on much more expensive vehicles.
Even after tariffs and modifications to meet European standards, BYD executives have pledged to sell the Seagull for less than €20,000 ($21,500).
That would price the four-seater below electric rivals that Stellantis, Renault and others are counting on to help them bridge the energy transition.
The Seagull's pending arrival is increasing pressure on Europe's automakers for dominance in the post-combustion-engine era. A competition investigation in Brussels isn't likely to extinguish the threat.
“We are looking very closely at this model and others coming from Chinese EV makers,” said Martin Sander, head of Ford's European EV business. “Of course, we are nervous when new competition is coming to the market.”
The Seagull has been praised for the build quality, design and technology BYD has packed in for the price. It's no one-off: the company plans to introduce a higher-end €25,000 EV even before the city car, European Managing Director Michael Shu said at an industry event in London in May 2024.
BYD's plans for two plants in the region will help it blunt the effects of any European Union tariffs meant to slow its path.
The model is already doing well outside its Asian home base. In Mexico, where the car is dubbed the Dolphin Mini, drivers have been flocking to buy the 358,800-peso ($19,780) car since its introduction in February 2024, despite a charging infrastructure that's still in its infancy.
Mexico “is not great for us, but in the end we found a lot of demand, a lot of heat for this,” BYD Executive Vice President Stella Li said at an event last week (May 2024) in the capital, unveiling a plug-in hybrid pickup for the Mexican market.
BYD is in the vanguard of Chinese automakers that are increasingly targeting exports after seizing control of their home market. Tesla CEO Elon Musk warned in January they will “pretty much demolish” most other automakers if trade barriers aren't erected.
While President Joe Biden has moved to almost quadruple US duties on Chinese EVs, essentially slamming the door on near-term imports, tariffs are more complicated for Europe.
That's because the region's automakers are more dependent on China than their US counterparts, making them vulnerable to retaliatory measures from Beijing. And Europe's plan to phase out sales of combustion-engine cars will require cheaper cars to boost mass-market adoption.
The EU has launched a probe of China's EV industry and is nearing a decision on raising barriers, but industry executives and experts have pushed back.
“Tariffs should not be used to shield our lead manufacturers from meaningful competition,” said Julia Poliscanova, senior director for vehicles and e-mobility supply chains at lobby group Transport & Environment. “What matters on top of climate targets, which are critical, is actually to have local jobs and for decarbonization not to result in de-industrialization.”
Founded in 1995, BYD started by making batteries, before expanding into automobiles in 2003. It started passenger car sales in Europe three years ago (2021) with splashy displays at both the Paris and Munich auto shows.
For now it's the former British brand MG Motor that's leading the charge in Europe, after spending years to rebuild its dealer network and customer base since its 2007 acquisition by Shanghai Automotive Industry Corp. It now has the UK's No. 2-selling EV with the Chinese-made MG4, behind Tesla's Model Y.
Incumbent European automakers are considering unorthodox steps to counter the challenge, including new alliances.
Renault is openly shopping around for partners to cut costs on a small-car platform, while Stellantis will start sales in September 2024 of cars made through its joint venture with China's Leapmotor.
“We have no intention to let this price band open for our Chinese competitors,” Stellantis CEO Carlos Tavares said last week (May 2024) about the upcoming European Seagull, dismissing calls for tariffs. “We don't think that protectionism will give us a long-term way out of this competition.”
Tavares has long emphasized acting swiftly to counter the growing competition. The deal with Leapmotor, forged in October 2023, offers the Jeep and Peugeot owner access to China's cost advantages and advanced EV technology, which the US and EU have said benefit from unfair government aid.
While the overall share of Chinese brands in Europe's electric market was around 7% in 2023, Transport & Environment projects they could reach 11% in 2024 and 20% in 2027.
Judging by the reviews, incumbent automakers in Europe and the US are right to take the Seagull seriously. Caresoft Global, a Michigan engineering firm that tears down vehicles to evaluate quality and manufacturing techniques, pored over the Seagull to assess money-saving details in its construction.
“Everyone in the industry should be talking about this car, seriously, because it's quite a vehicle,” Caresoft President Terry Woychowski said in a video posted on InsideEVs. “It changes the definition of cheap and cheery, which basically said, ‘Oh, sell something that's just really cheap.' This doesn't come across that way at all.”