China's EVs are dirt cheap. Its policymakers are concerned
EV manufacturers are locked in a death spiral of cost-cutting fuelled by weak domestic demand and an overcrowded, ferociously competitive marketplace that has been bloated by state subsidies.
Today, Chinese motorists can drive off in BYD's top-selling Seagull hatchback for just 50,800 yuan (about $11,000) – more than 30 per cent below its guide price – after the EV giant kicked off a price-slashing war in May to squeeze its rivals.
Its competitors followed suit.
Only a handful of the 129 EV brands in China are turning a profit, BYD among them, while others are simply trying to outlast their rivals in weathering mounting losses.
The toxic competition has spawned a phenomenon of dealers passing off new cars, fresh off the assembly line, as 'zero-mileage' used cars. They are then heavily discounted and sold domestically and overseas to boost revenue and clear inventory, while further driving down prices.
The price war has prompted warnings from analysts, and even carmakers, of a looming mass consolidation that will wipe out dozens of players – a bad outcome for buyers and one that will drive up unemployment.
The EU, US and even China's friends in Asia and South America have complained about cheap Chinese goods flooding their markets and wiping out local competitors. You won't see Chinese EVs on American roads. They have been shut out by a 100 per cent tariff imposed by the Biden administration to protect American carmakers.
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