The Chinese electric vehicle giant BYD deepened the flames of a brutal price war in China on Wednesday by cutting the price of its cheapest car. The Seagull, a compact car a little shorter than a Mini Cooper and about as long as a Fiat 500, will start at 69,800 yuan ($9,700). BYD has become a relentless discounter in the price war that Tesla triggered in the world’s largest auto market last year. That aggressive stance has helped BYD unseat its U.S. rival as the world’s biggest seller of fully electric vehicles, and it also has fueled growth at a time when sales of traditional gasoline-powered cars in China are slipping.
In a market where pure battery-powered electric vehicles aren’t yet cost-competitive with gas-powered ones, making EVs more affordable has been the best way to speed up adoption. But that’s no easy task. For years, European, Japanese, and American automakers have struggled to offer a range of EV shapes that customers will want without destroying their profit potential.
But the Chinese EV makers whose sales have rocketed to the top of the global rankings—such as BYD, Geely Auto, GAC Aion, Leapmotor, and Xpeng—have made a lot more progress in that regard. They have a whole host of inexpensive models, including plug-in hybrids, on the market, and they’ve been able to bring those prices down without damaging their profit margins.
A new round of price cuts kicked off in China at the end of 2023 and has been escalating ever since. That’s putting pressure on the country’s leading players to keep up their brisk growth pace and has enticed some other companies with lower-end offerings into the market.
That hasn’t done much to boost the sluggish sales of fully electric vehicles overall, which haven’t been helped by a slowdown in one of the world’s most important economies. Sales (including exports) of pure battery-powered EVs and plug-in hybrids in China are expected to rise 13% this year, a sharp slowdown from the 38% jump in growth seen for 2023.
Despite those pressures, BYD is determined to continue its assault on the domestic market. It’s also looking at overseas expansion, although it won’t attempt a comeback in the United States soon, thanks to political tension between the two countries. The Seagull will likely find a home in markets such as Europe and South America, where BYD already has strong sales.