Recently, Chinese automaker BYD introduced its U9 Model, part of BYD’s luxury brand, Yangwang. The company made bold claims that its new automotive product could compete with Ferrari and Lamborghini. Based on its top speeds and acceleration, it appears the U9 Model might be able to back up this claim. But what was most impressive was that the U9 Model is electric, and BYD’s electric super car can travel up to 192 mph. This is just the latest on advances that Chinese automakers have made in the EV marketplace. BYD’s electric supercar simply reflects the strides they have made as an industry–not just within China but globally–and the U.S. is certainly on BYD’s radar as a target EV market to conquer.
(The EV market is cooling–read all about it in this Bold story.)
In the U.S. electric vehicle market, things have not gone as planned. Quarterly reports by major U.S. automakers have shown a failure to hit target sales, and despite government support and subsidies, there is still a tendency for most Americans to prefer their gas-powered automobiles. Part of the reason for this relates to the cost of owning an EV as well as a lack of needed infrastructure. When it comes to cost, however, this is where Chinese EV producers have a noted edge. Forget about BYD’s luxury brand offerings. The bigger threat to the U.S. automobile market are their low-priced everyday EVs. BYD’s electric supercar sounds impressive, but it’s not the vehicle that most threatens Tesla, Ford, and others. It’s instead China’s ability to produce quality, affordable EVs in mass.
BYD’s EV Market Strategies
When it comes to Chinese EV manufacturers, BYD and Geeley are perhaps two of the best known. These Chinese tech titans are making significant progress in EV manufacturing. BYD, however, has made larger strides as of late, especially globally. Year after year, BYD has produced and sold increasing numbers of electric vehicles. In 2023, for example, it peaked at over three million electrified cars produced with roughly half being hybrid and the other fully electric. These figures allowed BYD to become the top EV seller in the fourth quarter of 2023, surpassing Tesla in the process. Likewise, BYD is on pace to produce four million electrified cars in 2024. Thus, while BYD’s electric supercar gets headlines, it is tremendous growth that deserves greater attention.
(Take a deep dive on the tech titans of China in this Bold story.)
There’s no question that BYD can compete with Tesla on a higher end level of electric cars. This is why BYD’s luxury brand Yangwang was launched last year. It also is likely why it is designing supercharged electric cars. BYD’s electric supercar may be classified alongside gas-powered Ferraris and Lamborghinis. But this also suggests that BYD is flexing its muscles within its luxury brand in front of Tesla. Of course, these pursuits are not BYD’s bread and butter. Instead, it produces a number of lower-cost EVs that start at around $11,000. This is much less than the average EV price tag in the U.S., which shows the potential threat Chinese electric cars pose. Should BYD and similar Chinese EV car makers gain market access to U.S. consumers, American automakers may be scrambling.
Expanding Globally Despite Tariffs
If it weren’t for existing trade barriers between the U.S. and China, Chinese electric vehicles would already be on the market. But currently, the U.S. imposes a 2.5% tariff on all import vehicles, and it requires a 25% tariff on all Chinese EVs. This has posed a formidable barrier to entry for Chinese cars into the U.S. market. But this not last for much longer. Recently, BYD announced plans to manufacture electric vehicles in Mexico. This strategy would allow BYD EVs to fall under the U.S.-Mexican-Canadian preferred trade agreement. This would reduce tariff exposure while also allowing consumers to enjoy the $7,500 EV tax credit. The current administration has removed subsidies for Chinese-made parts including batteries and EVs. But this would not significantly affect BYD’s plans. Plans to introduce BYD’s electric supercar aren’t likely, but low-cost EVs certainly are.
Plans for EV manufacturing in Mexico aren’t the only global locations that BYD is considering. For both its regular brands and BYD’s luxury brand, Europe as well as Southeast Asia are important targets. BYD already has initiated new manufacturing plants in Thailand, Brazil, Uzbekistan, and Hungary. It is also looking to expand manufacturing of EVs into Indonesia as well. Scaling electric vehicle production to this degree will further enable BYD to be a frontrunner in the EV market. And it will also allow further opportunities to offer lower-cost EVs to consumers in numerous regions. Even with U.S. or EU tariffs, the price differential may not prevent BYD’s market entry. The economies of scale that BYD enjoys along with Chinese government subsidies would enable BYD to proceed regardless.
The Potential Impact on U.S. Car Makers
At the current time, the U.S. faces a dilemma as it relates to Chinese EV automakers. On the one hand, it can impose trade barriers to prevent BYD’s manufacturing imports from Mexico. This would include both BYD’s electric supercar and its more traditional models. However, in the process, it would deprive Americans of affordable EVs. This aligns with U.S. goals to convert Americans over to sustainable energy and deter climate change. Whether it’s BYD’s luxury brand or its low-cost electric cars, both could persuade Americans to make the transition. If this fails to happen, then it may well be that the U.S. will fall behind other nations in EV transportation technologies.
Ideally, U.S. automakers including Tesla should step up and address the issue to a better degree. Ford Motors has said it has a plan to do just that, but this remains to be seen. The issue is that Chinese manufacturers have advanced abilities in producing lithium-iron-phosphate (LFP) batteries, driving costs of EVs lower. China also offers low-cost labor and extensive manufacturing power. Without access to these, American EV manufacturers will have a hard time competing with BYD’s luxury brand and everyday electric vehicles. Given this, there’s no question that China is fully capable of making EVs that Americans want. The bigger question is whether this will be permitted or whether it will be the doom of U.S. car makers.
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