Why BYD sells for twice as much in Europe as its cars in China
One of the biggest criticisms the European auto industry has of its Chinese competitors is that they offer their products at prices that make it difficult to compete. So much so that the European Commission itself has launched an investigation into whether Xi Jinping’s government provided government subsidies to its brands.
However, BYD, which has the most forecast and growth outside of China, sets prices for its models overseas that are in some cases double the prices of its models sold at home. So much so that the BYD Seal could sell for more than its direct competitor, the Tesla Model 3.
The reason is mainly due to the price war that is happening in the electric vehicle market in China. Late last year, Tesla, faced with growing competition, sharply slashed prices.
As a result, other brands made a similar decision and now, on average, prices for electric vehicles are lower by about 15%. It has also made Chinese buyers more skeptical about buying a car, given that they have no guarantee as to its residual value.
Therefore, BYD’s overseas strategy is to achieve higher profits, which can improve profitability and reduce the impact of price war.
CEO Wang Chuanfu said this in a call with investors in March last year. However, such large differences in prices across different markets are rare.
By comparison, the entry-level BYD Atto 3 SUV sells for €19,000 in China. In Spain part of 35,000 euros. This only emphasizes the price advantage of Chinese brands over Western ones.
Throughout its history, BYD has found ways to cut its costs at every stage of the supply chain, from raw materials to distribution (they have their own cargo ship), including their own battery production.
According to data collected by Benchmark Mineral Intelligence for Reuters, the price of batteries from Chinese manufacturers is 18% lower.
According to Ben Townsend, head of the automotive division of British consultancy Thatcham Research, “Chinese brands are happy to keep prices out of their market and achieve higher profits.”
Of the 3 million units sold by BYD in 2023, 240,000 were destined for overseas markets, accounting for 8% of the total. However, they plan for that figure to reach 400,000 this year.