China’s EV Push, Led by BYD, has Left Global Names in the Dust

The world’s largest auto market, China, is speeding towards an electric future, leaving established global automotive brands in the dust.

When car executives meet in Shanghai for the Shanghai Auto Show on Tuesday, they will be returning to a very different market than the one they left in 2021, when the industry gathered for a limited event under rigorous COVID-19 rules. The most significant shift: Chinese-made brands now lead in key areas, and their rise has been fueled by new electric-drive vehicles that are gaining market share both at home and abroad.

BYD will debut the Seagull as an affordable EV hatchback at this year’s Shanghai Auto Show

BYD has emerged as the clear victor, with the company announcing a new hatchback electric vehicle (EV) for value-conscious buyers and a more expensive EV designed like an SUV at the Shanghai exhibition. According to sales data, BYD’s sales in China have been up about 69% this year, giving it an 11% share of the overall auto market, higher than Volkswagen or Toyota.

Song L
BYD’s new Song L set to debut at the 2023 Shanghai Auto Show

According to figures from the China Passenger Car Association, passenger car sales in China fell 13% in the first quarter. But sales of EVs and plug-in hybrids, which are currently dominated by Chinese automakers led by BYD, increased by 22%. On the flip side, there was an almost equivalent decline in the sales of internal combustion cars. The end effect has been a double whammy for the likes of Volkswagen, General Motors, Honda, and Nissan. Sales and market share are both declining.

Related: BYD Showcases Yangwang U9 EV with Most Advanced Vehicle Body Control System

Since January, more than 40 automakers have followed Tesla in significantly slashing EV pricing, fueling sales of EVs, and plug-in hybrid electric vehicles (PHEVs), both of which are classified as “new energy vehicles” in China. According to analysts, the price war has also reduced industry profitability.

The “Last Line of Defense” for Combustion

For many years, combustion-engine automobiles produced by foreign automakers in collaboration with Chinese brands dominated China’s entry-level passenger car market. This year, though, has been a washout for gasoline-only automobiles priced between $22,500 and $30,000. In the first quarter, sales were down 20.5%, compared to a 68% increase for EVs and plug-in hybrids.

Related: Stellantis CEO Calls for Increased Tariffs on Chinese Cars

With a starting price of under $20,000, BYD’s Song plug-in hybrid SUV outsold the Nissan Sylphy, which had been China’s best-selling car for three years in a row. BYD’s Dolphin EV, which begins at around $17,000, outperformed the Volkswagen Passat.

2021 BYD Song Plus China spec 0

The entry-level market in China is probably “the final bastion” for gasoline-only cars due to the cost pressure that battery materials are putting on EVs, according to Xu Haidong, deputy chief engineer at the China Association of Automobile Manufacturers.

Related: Chinese Brands Now Account for Nearly 40% of New Car Sales in Russia

With costs ranging from $52,500 to $60,000 in China’s luxury segment, electric-drive vehicles are already the most popular. For automobiles with a combustion engine but the ability to be charged and run for shorter distances on electric power, or plug-in hybrids, BYD dominates the Chinese market. More than half of BYD’s sales this year have been plug-ins, allowing the company the ability to compete on pricing across its whole line-up.

Tesla’s ‘Heart and Lungs’

Sales of Tesla’s Model 3 and Model Y in China increased by 27% in the first quarter to a little over 137,000 units. After lowering prices in China by between 6% and roughly 14% in January, Tesla also saw a rise in market share.

That resulted in starting costs for Teslas in China that were between $7,500 and around $10,700 less expensive than the now-lowered U.S. rates. When Tesla releases its first-quarter financial results on Wednesday, analysts and investors will pay close attention to what that means for margins. “Gaining further share in the key China market will be the hearts and lungs of the Tesla growth story,” according to analysts.

China Gaining Big on the Exports

China’s exports, driven primarily by EVs and PHEVs, are expanding quickly, posing a significant challenge to well-known brands. China’s exports increased 83% last quarter compared to the same period the previous year. BYD had a 13-fold increase in exports as it currently sells its vehicles throughout Europe, Oceania, and Southeast Asia.

Source: Reuters

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