BYD launches attempt to crush Tesla in China
BYD has slashed the price of its electric vehicles (EVs) in China as it steps up its war with Tesla.
The Chinese EV maker is now selling its entry-level car for 75pc less than the cheapest Tesla after cutting the price of the Seagull hatchback by 20pc to 55,800 yuan (£5,712). That is around a quarter of the cost of Tesla's cheapest car, the Model 3, which sells for 231,900 yuan.
The Shenzhen-based EV manufacturer, whose investors include Warren Buffett, over the weekend announced discounts on 22 of its models in China until the end of June as it battles a slowdown in the local market and higher tariffs in the EU and US.
While BYD's Seagull hatchback is smaller in size than Tesla's Model 3, it demonstrates the strides that Chinese manufacturers have made in lowering the cost of EVs. China has become the world's biggest market for battery-powered cars and domestic giants have invested heavily in producing affordable vehicles.
The sweeping price cuts also highlight the intense competition in the market. A record 3.5m EVs were left sitting unsold in dealerships across the country in April. It marks the highest stock level since December 2023, according to figures from the China Passenger Car Association. Slowing economic growth in the country has hit sales.
The slump is a blow to Tesla, which counts China as its second biggest market. Sales of Chinese-made Teslas, which cover both the local market and exports to Europe, fell 6pc in April compared to a year earlier and have now been falling for seven straight months.
Shares in BYD fell 5.9pc in Hong Kong on Monday following the price cut announcement as investors fretted about profit margins being eroded away. Rivals Li Auto and Great Wall Motor declined 3.2pc and 2.7pc respectively.
Rico Luman, a senior economist at ING, said the price war was 'clearly a signal of intensified competition in China and also a maturing of the EV market'.
'There's over 100 manufacturers active in China itself in domestic markets for EVs,' he said. 'If you look at the margins they are not at a decent level at the moment so it really will hurt. It may be the start of a shake out in the Chinese market because we do expect that a lot of these brands will disappear eventually.'
While the cuts won't take effect beyond China, Tesla and other Western manufacturers have long struggled to compete on price with Chinese rivals and have seen their market share eaten away. BYD outsold Elon Musk's Tesla in Europe last month for the first time ever and overtook Tesla in Britain in January. The symbolic shift has been helped by a driver boycott of Tesla over Mr Musk's support for Donald Trump.
British interest in cars built by Chinese manufacturers has soared, according to Auto Trader, the UK's largest online automotive marketplace. More than 1.4m car adverts viewed in the first four months of this year on its website were for Chinese brands. That represented a market share of 5.3pc, compared with 1.3pc during the same period in 2024.
BYD accounts for around half of advert views and stock on Auto Trader, while other Chinese manufacturers to have recently debuted in Britain include Jaecoo, Leapmotor, Skywell, Omoda and Xpeng.
Ian Plummer, commercial director at Auto Trader, said: 'Our research shows a breakthrough for Chinese manufacturers in the UK market over the last 12 months.
'Several brands are now motoring from a standing start and bigger names like BYD have embedded themselves in the public consciousness.'
Lower prices in China come as BYD seeks to boost sales in its home market and pivot away from focusing on international expansion. Mass adoption of EVs in Europe has been slower than expected and the EU has also imposed tariffs on cars made in China. As a result, BYD pays a 27pc import tax on battery electric vehicles it sells in the EU.
In the US, cars have been caught up in Mr Trump's ongoing trade spat with Beijing. While tariffs on Chinese goods have now been lowered from their peak of 145pc, they still stand at 30pc.
Mr Plummer said: 'Trade turbulence with the US and EU tariffs is also making the UK relatively more attractive as a market.
'There will be much more to come from Chinese carmakers.'
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