Recently, the market for electric cars has been strained, and several major manufacturers have been forced to lower their prices to compete.
Many are concerned that Chinese electric car manufacturers are keeping their prices low to out-compete their established rivals.
However, the reality for some brands is different according to a report from Reuters. Instead, it is about raising the prices of the cars you export in order to maximize profit.
Sale on electric cars: Tesla, Toyota and BYD lower prices
Price war on electric cars in China
The car manufacturer that mainly applies the strategy is BYD, which is exposed to increasingly tough competition and price pressure in its home market.
This is straining the company’s margins, and to compensate, it raises prices abroad – to a price level that is still lower than electric cars from European brands.
In order to offer more value for money than the Europeans, they usually offer more standard equipment.
Even with costs such as shipping from China included, the strategy means tens of thousands of kroner in extra profit per car sold, according to Reuters.
EU inspectors see transition to electric cars – can damage the economy
Up to 178 percent higher prices
According to the Reuters report, an electric car of the model BYD Atto 3 costs between 81 and 174 percent more in some export markets than it costs in China.
The corresponding range for the sister model BYD Dolphin is between 39 and 178 percent.
A BYD Dolphin has a basic price of around SEK 180,000 in China, compared to a basic price of SEK 369,900 in Sweden. This corresponds to a price mark-up of roughly 105 percent.
Leasing electric cars a “ticking bomb” – warns the expert
That’s why electric cars from China are so cheap
The ability to build such cheap cars is due to the fact that the Chinese manufacturers have rationalized costs at every stage of production – including battery production and the extraction of minerals for them.
The analysis firm Benchmark Mineral Intelligence estimates that battery production in China is 18 percent cheaper than anywhere else in the world.
A company like BYD, which manufactures its own batteries, can negotiate additional savings at each step of the value chain.
Meanwhile, Chinese EV manufacturers also benefit from government-subsidized land, low labor costs and cheap electricity.
The Chinese car manufacturer will develop self-driving in Berlin