Follow the money: How China gained the competitive edge in EVs

**Emma** (0:01)
Here we are, there's a little tune every time you get in.

**Felicity Hannah** (0:04)
It's very cheery.

**Emma** (0:05)
Very cheery, it's a little welcome to your car.

**Felicity Hannah** (0:08)
This is Emma, and she's not the only driver who wanted an electric vehicle and opted for a Chinese model. She lives in the northwest of England, and one in 10 cars sold in the UK in June were Chinese. Most of them were electric vehicles. 18% of electric vehicles, or EVs, sold in the UK are manufactured in China. That's according to one industry group.

**Emma** (0:30)
So I chose an EV primarily for the sustainability, but also, to be honest, for the fact that they are just so cheap. So it's very, very cheap to charge. I had seen a lot of Chinese EVs about on the roads. They look quite stylish, but to be honest, I wasn't particularly sure about them.

**Felicity Hannah** (0:48)
The UK is a big importer of Chinese EVs from brands like BYD, Jaekoo and XPeng. In Western Europe, it's also hitting a record high.
Chinese vehicles are competing on technology, size and availability. But perhaps more than anything else, they're competing on price.

**Emma** (1:08)
And although it was a little bit cheeky, I said to the guy in the showroom, are these cheap because they are rubbish?
And he was fairly astonished, but he really did assure me that that wasn't the case. He said that BYD are just trying to break into the UK market, so offering the cars an absolute bargain price. He did assure me that they won't be this cheap for long.

**Felicity Hannah** (1:33)
I'm Felicity Hannah. This is Business Daily from the BBC World Service. And today we're looking at the incredible growth of Chinese EVs and asking how they can outcompete rivals on price and what that means for the world's car industry.

**Brian Gu** (1:47)
I would say the Chinese company's success is because they came out of the most competitive market and I would say the fittest gym. That allows them to compete well and bring that technology, the efficiency and the cost competitiveness to markets outside of China.

**Felicity Hannah** (2:03)
Well, before we follow the money, let's look at the numbers. Business Daily's Josh Martin has been doing just that. Josh, record highs for these vehicles.

**Josh Martin** (2:12)
They haven't cracked the United States, where there are tariffs in place of 100%.
So you're paying double what you normally would on the normal market. But in other major markets, they have seen an incredible growth alongside growing consumer demand for electric vehicles. And that's putting pressure on traditional car makers. Last year, European and North American car makers were responsible for around 15% of global EV sales each. Chinese EVs, though, made up 60% of sales.

**Felicity Hannah** (2:39)
Wow.

**Josh Martin** (2:40)
What's really interesting is that those European sales are despite EU tariffs of up to 35.3% for electric cars made by certain Chinese manufacturers, as well as the standard 10% import duty on top of that. So despite this added tax at the border, they are still competing and winning against established players like Volkswagen and BMW.

**Felicity Hannah** (3:01)
Okay. How much cheaper than are Chinese vehicles compared to other brands?

**Josh Martin** (3:06)
So obviously it depends on the model, but they undercut a lot of their competition when it comes to price. One 2023 report from Swiss Bank UBS suggested that the company BYD is able to build cars 25% cheaper than Western competitors. And that feeds through to the price on the showroom floor. A Centre for European Policy Analysis report found that the average price of a European made EV was 50,000 euros or $58,000 compared to the average sale price of 35,000 euros for an imported Chinese EV. And that helps explain why their market share in Europe has hit a record 14.2% last month.

**Felicity Hannah** (3:42)
So are they competing just on price?

**Josh Martin** (3:44)
It's what you get for your money. And Chinese brands like BYD are actually at the forefront of innovation with things like rapid charging and battery storage, as well as the bells and whistles inside the vehicle. So some customers are opting for Chinese EVs because of the overall offering, not just because it's cheap.

**Felicity Hannah** (4:01)
How has the Chinese EV industry been able to gain that advantage of being cheaper across all the different types, all the different range?

**Josh Martin** (4:10)
Well, let me answer your question with a question. What links the legendary Nokia 3310 that we used to play Snake on in the early 2000s with the world's number one EV seller?