BYD Seagull EV puts global auto execs, politicians on edge

LIVONIA, Mich. — Small electric vehicles are having a huge impact on the global auto industry.

It’s not the electric car itself that’s making waves, but its price — and its potential to disrupt domestic auto industries around the world.

Made in China BYD The Seagull is a small all-electric hatchback that starts at just 69,800 yuan (or less than $10,000) and is reportedly bringing profits to the increasingly influential Chinese automaker.

That The latter — U.S. automakers have mostly failed to realize profits on electric vehicles — plus Chinese automakers’ expansion into Europe, Latin America and elsewhere, from Detroit and Texas to Germany and Japan. C-suite executives and politicians are nervous.

Former automaker Terry Woychowski said Seagull could become “a clarion call for the rest of the automotive industry.” General Motors Currently, he is president of the automotive business of Caresoft Global, an engineering consulting company. “This is a major event.”

Although Seagull is not yet sold in the United States, BYD is expanding its automotive operations globally, and some believe it is only a matter of time before more Chinese-made vehicles arrive in the United States.

Global automakers worry that Chinese rivals such as Buffett-backed BYD could flood their markets, undermining domestic production and vehicle prices, hurting their own auto industries.

The American Automobile Alliance said: “Cheap Chinese cars – cars that are so cheap because they are backed by the power and money of the Chinese government – entering the U.S. market could ultimately become an extinction-level event for the U.S. auto industry. .” said U.S. manufacturing advocacy organization Manufacturing in a report last month.

BYD sold 1.57 million pure electric vehicles last year, while sales of pure electric vehicles in 2020 were only 130,000. This sales growth is enough to surpass Tesla by the end of 2023 and become the world’s largest electric vehicle manufacturer.

The rise of Chinese automakers such as BYD leads the way Tesla Chief Executive Elon Musk warned in January that Chinese automakers would “destroy” global rivals without trade barriers.

Bernstein reports that BYD’s growth (including sales of non-electric vehicles) is achieved by exporting more vehicles outside China: of BYD’s sales of more than 3 million vehicles last year, overseas markets accounted for about 10%. The share doubled from the beginning of the year.

BYD did not respond to a request for comment.

Driving a Seagull is no different than driving a Chevrolet Bolt, Nissan Leaf or BMW i3. It accelerates very quickly. very quiet. It has a beautiful screen and a combination of plastics and soft touch points, including sporty and comfortable seats.

Seagull, also known as BYD Dolphin Mini in Latin America, is slightly smaller than General Motors The now discontinued Chevrolet Bolt EV.

Kyle Software Digital and physical analysis of every part of the vehicle, from bolts and latches to seats, motors and battery housings. It then determines how its customers, primarily automakers and suppliers, can improve efficiency and reduce product costs.

Preliminary research into the BYD Seagull found that its design, engineering and execution are efficient and simple, yet have unexpected qualities and expected reliability.

“They do what they do very well,” Wojchowski said. “It was done very effectively.”

For the price, this is a well-equipped vehicle. (BYD even lowered the vehicle’s starting price by 5 percent earlier this month, down from about $11,000 earlier this year.)

Caresoft CEO Mathew Vachaparaampil said at an auto conference hosted by the Chicago Federal Reserve Bank in January that the company still made “some money” on Seagull, or at least broke even, despite the cheap price.

If BYD wants to sell the Seagull in the United States, it will have to meet U.S. federal vehicle requirements, which will add extra cost to the car.But the price for an electric vehicle to reach U.S. shores may still be tens of thousands of dollars cheaper than the current average price of an electric vehicle in the United States, which means Cox Automotive Report is Over $52,000.

BYD announced last month sales will begin The Seagull/Dolphin Mini EV costs 358,800 pesos (approximately $20,990) in Mexico.

BYD has found success in battery technology; in-house sourcing, also known as vertical integration; and production of parts, according to Caresoft. Most notable is the low-cost battery technology developed by BYD, which costs far less to manufacture than the lithium-ion batteries commonly used in U.S. electric vehicles.

BYD, which stands for “Build Your Dreams,” first pioneered “Blade” battery technology in smartphones and has grown to become one of China’s best-known car manufacturers.

Its focus on vehicle efficiency is reminiscent of U.S. electric vehicle leader Tesla, which has also been able to reduce vehicle costs over the years.

Traditional automakers are only now beginning to try to imitate some of Tesla’s processes, such as its hyper-manufacturing process and vertical integration of key parts like motors, batteries and other components. Tesla also adapted quickly.

For example, the Tesla Model 3 no longer has a floor. Instead, the car’s highly protected battery box replaces the conventional bodywork underneath. The kind of changes Tesla has implemented over the past few years don’t typically happen at traditional automakers without a complete vehicle redesign.

BYD also adapted quickly. The company quickly introduces new and updated products. It also quickly built up manufacturing as it set its sights on factories in Thailand, Brazil, Indonesia, Hungary, Uzbekistan, Probably Mexico.

Coupled with other advantages such as government support, lower labor costs and increasing production capacity, the company becomes a growing threat to global peers.

BYD’s rise comes at a time of instability in the dynamics of the global auto industry.

While Chinese automakers continue to expand, traditional U.S. automakers are shrinking both at home and in China.

Their decline in the U.S. follows the arrival of Japanese automakers such as Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. and, more recently, South Korean auto giant Hyundai Motor Co. and its Kia subsidiary.

The so-called Big Three of American automobiles—General Motors, Ford and Chrysler, now represented by star — Their U.S. market share dropped from 75% in 1984 to about 40% in 2023, according to industry data.

U.S. politicians target Chinese imports and European lawmakers over concerns about local auto industry Investigation launched Promote the rise of electric vehicles made in China.

“We are very concerned about China aggressively growing our industry in the United States even though we are now building this incredible The backbone of manufacturing.”

Florida Republican Senator Marco Rubio proposed a significant increase in Chinese auto import tariffs of $20,000 per vehicle to prevent China from “flooding into the U.S. auto market.”

Currently, Chinese-made electric vehicles are subject to a 27.5% tariff when imported into the United States, which includes the 2.5% tariff that normally applies to imported cars and an additional 25% tariff that the Trump administration imposed on Chinese-made vehicles in 2018.

However, Chinese automakers can still produce in Mexico and import cars from Mexico into the United States through the USMCA (formerly the North American Free Trade Agreement, or NAFTA).

However, former President Donald Trump, the Republican frontrunner in the 2024 presidential race, suggested on Saturday that he would impose 100% tariffs on cars produced in Mexico by Chinese companies if he is reelected.

Marin Gjaja, chief operating officer of Ford’s electric vehicle division, said in a recent interview with CNBC: “Over time, we see automakers eventually entering all the important markets…eventually the Chinese will come to the United States.”

Jia Jia said that while Ford can’t control regulations or expansion in China, it can “become really competitive on the technologies that customers want” and win customers more effectively.

Wojchowski believes that in order to compete with Chinese brands such as BYD, traditional automakers must learn, unlearn and change quickly.

He said companies like Detroit automakers have a century-old procedures, standards and other work processes that they must rethink to better communicate with China before cars like the BYD Seagull land on U.S. shores. Automakers compete.

“You have to learn. You have to unlearn what you’ve learned, and you have to do it quickly,” he said. “Just because you’ve been doing something for 100 years, doesn’t mean you should keep doing it. It’s no longer appropriate.”

– CNBC Evelin Zheng and Dylan Butts contributed to this report.