When will there be a real problem for traditional brands? When Chinese car manufacturers start selling in Europe at Chinese prices. They are many times cheaper at home

European automakers are openly afraid of being overtaken by Chinese competition, but so far it seems that some Chinese manufacturers have come to Europe for high profits. The leading producer of electric cars named BYD, designated by the Chinese government as the leader of electric mobility in the EU, sells its cars at home significantly cheaper than in the European Union and other countries.

The paradox is that BYD still remains price competitive in Europe, despite the recent increase in its export margins.

For example, the compact electric SUV BYD Atto 3 (see main photo) costs around 450,000 crowns in China, while it costs a million in Germany. And yet, compared to our competitors, it is attractively priced.

Reuters even compared the prices of the BYD Atto 3, BYD Dolphin and BYD Seal in China against prices in Germany, Brazil, Israel, Australia and Thailand. The result was an increase against domestic prices of 81-174% for the Atto 3, 39-178% for the BYD Dolphin and 30-136% for the BYD Seal models. However, it must be added that the vehicles for export were usually better equipped.

However, such a huge difference is not common, as car manufacturers generally sell their vehicles around the world usually within a narrow price range. It is therefore likely that BYD makes decent money in Europe and other countries, because at home they have to keep their prices low due to high competition.

This, of course, is causing wrinkles on the forehead of BYD, but it can be comforted by the fact that it makes extensive use of generous support from the government, even as a battery manufacturer. So he always collects subsidies, earns little at home, and makes a lot of money in the world.

It should also be added that Chinese automakers also benefit from cheap labor, cheaper energy, and more affordable (often subsidized) land for factories and other buildings. There is also less bureaucracy in China and all this helps the manufacturers there to grow.

However, it’s not just about margins, because Chinese car manufacturers and their importers have additional costs in the context of exports to Europe, which are also in real danger of increasing due to the threat of punitive customs tariffs due to the European Commission’s suspicion of excessive support for Chinese manufacturers by China by the government. So what is driving the selling price of Chinese cars in the EU against prices at home? These are for example:

• Margin
• Duty
• Tax rates
• Approval costs
• Track changes and apply new approvals
• Logistics costs
• Usually better equipped models
• Building a sales network
• Building a service network
• Marketing (Gigantic Expense)
• Financing of stock cars
• Building and operating factories in the EU

He will remind that BYD has become a dominant player in China’s electric vehicle market, so it is now investing heavily and increasing sales in markets around the world.

BYD’s exports in 2023 amounted to 240,000 cars and represented 8 percent of the total sales of 3 million cars. However, the manufacturer is churning out new models one after the other, which is why this year it expects to increase exports to 400,000 cars.

What’s more, automakers operating in China are expected to introduce a total of 110 new electric cars and plug-in hybrid models this year, most of them coming from Chinese brands. However, some cars will also head to us, which is indicated, for example, by the busy schedule of the British-Chinese brand MG, which is preceded by the European launch of more than 10 new models, mostly electric cars.