BYD’s Low-Cost Electric Vehicles Pose Threat to US Auto Industry, Sparking Calls for Tariff Bans and Adjustments in Design Practices

The emergence of low-priced electric vehicles (EVs) from Chinese automaker BYD poses a significant threat to the US auto industry, according to recent reports. While the Seagull, priced at around $12,000 in China, has gained traction outside of its home country, high import tariffs on Chinese vehicles have prevented its sale in the US. However, analysts predict that BYD’s EVs could disrupt the global auto industry, reminiscent of the impact Japanese automakers had in the 1970s during oil crises. In response, US politicians and manufacturers have expressed concerns over the potential loss of jobs to China and the national security implications. Some have gone as far as proposing to ban imports of Chinese vehicles or imposing steeper tariffs. While the Seagull’s performance is comparable to its more expensive US-made counterparts, higher US labor costs mean that BYD can affordably produce its vehicles, thanks to its expertise in making batteries using lithium iron phosphate chemistry. The report suggests that US automakers must adjust radically to compete with Chinese manufacturers, who are leading the way in designing low-cost electric vehicles. Experts attribute the success of Chinese EVs to the country’s focus on democratizing EVs, unlike western markets that aim to attract high-income buyers. As a result, BYD has managed to keep production costs low by producing many of its components in-house, including electric motors, dashboards, bodies, and headlights. Although BYD designs its vehicles with cost and efficiency in mind, US automakers often design EVs with unnecessary engineering costs. Ford is building a lithium iron phosphate battery factory, using technology from China’s Contemporary Technology Co Ltd (CATL), which is set to revolutionize cost structures. Despite this, BYD remains ahead of US automakers in terms of scale, having sold 3 million vehicles globally in 2021 alone. The report highlights that while the Seagull boasts only one windshield wiper, thereby saving costs and labor installation, Americans are still learning how to make cheaper batteries. As BYD designs all aspects of its electric vehicles with cost and efficiency in mind, it saves weight, thus requiring fewer materials, helping the Seagull to cover a distance of 252 miles (405 kilometers) per charge, despite its smaller battery compared to similar vehicles produced by US automakers. Nonetheless, the Seagull’s interior is of high quality, featuring synthetic leather seats with matching body color stitching, a feature usually found on more expensive vehicles. The Seagull “Flying Edition” tested by Caresoft Global also features six air bags, rear disc brakes, and electronic stability control. While the Seagull’s acceleration may not be as impressive as other EVs, it is still capable of handling curves and bumps efficiently, and its top speed is electronically limited to 81 mph (130 kilometers per hour). While the Seagull requires modifications to meet US safety standards, Caresoft estimates that these changes would add approximately $2,000 to the car’s price, primarily due to stricter safety standards in the US compared to those in China. Ultimately, the report concludes that US automakers need to drastically revamp their design and engineering practices to remain competitive while shedding redundant processes from over a century of designing vehicles for combustion engines. As the Biden administration backs legislation and policies to develop a domestic EV manufacturing base, the US government may impose further tariffs to prevent Chinese vehicles from entering the US market, and some legislators propose a complete ban on imports of Chinese vehicles. However, Ford CEO Jim Farley has formed a small “skunkworks” team to design a new, low-cost EV, keeping both cost and quality in mind. Furthermore, Ford’s Farley acknowledges that Chinese automakers sold almost no EVs in Europe two years ago, but they currently hold a 10% share of the electric vehicle market in Europe. Ford is reportedly preparing to counter this trend.