BYD Launches Attack On Global Auto Industry

What happened?

China's leading electric vehicle manufacturer, BYD, has slashed the prices of 22 electric and hybrid models by up to 34%. This includes the entry-level Seagull EV, which now costs just $7,780, almost 50% less than similar models offered by Western competitors. This move poses a direct challenge to global automotive competitors, who must defend their market share in both the domestic and Chinese markets amid a host of other challenges.

Why does this matter?

• Attack on EU automakers: The price cuts set a new standard for EV pricing and put pressure on European producers, who are already struggling with burdensome EU regulations and US tariffs.
• Deepening geopolitical tensions: Despite various stimulus measures, the US–China trade war has taken a heavy toll on Chinese exporters. As the US increasingly decouples from China, the Beijing is attempting to gain a foothold in alternative export markets by supporting an industrial offensive through the automotive sector.

What’s the counterpoint?

• Price cuts may be temporary: China's car industry is experiencing significant oversupply. Dumping strategies could be a way of eliminating domestic competition and regaining dominance in a more consolidated market at a later stage.
• The move could backfire: BYD could provoke protectionist retaliation in its largest target market, the EU, where it has made considerable progress and recently surpassed Tesla's sales figures.