BYD Seagull: Impact on Global Automotive Industry and the Rise of Chinese Automakers

With a starting price of just 69,800 yuan, or less than $10,000, the China-made BYD Seagull is a compact, all-electric hatchback that is apparently profitable for the Chinese automaker.

TFD – Discover how the BYD Seagull and Chinese automakers are revolutionizing the global automotive industry with affordable electric vehicles, reshaping competition and market dynamics.

LIVONIA, Michigan The global automotive industry is being significantly impacted by a little electric vehicle.

The price of the EV and its potential to upend local auto sectors across the globe are what are creating waves, not the vehicle itself.

The BYD Seagull, a compact all-electric hatchback made in China, is allegedly profitable for the country’s rising powerhouse automaker, with a starting price of just 69,800 yuan, or less than $10,000.

Automotive executives and policymakers are on edge from Detroit and Texas to Germany and Japan due to the latter point—EV profits where U.S. manufacturers have largely failed to turn any—as well as the expansion of Chinese automakers into Europe, Latin America, and other regions.

According to Terry Woychowski, a former General Motors executive who is currently president of automotive at engineering consultancy firm Caresoft Global, the Seagull may be a “clarion call for the rest of the auto industry.” “This is an important occasion.”

Even while the Seagull isn’t currently available for purchase in the United States, BYD is growing its car lineup internationally, and some people predict that additional Chinese-made automobiles may eventually make their way here.

Global automakers are afraid that Chinese competitors, like as BYD, which is funded by Warren Buffett, may invade their markets and undercut local output and car prices, hurting their own auto sectors.

The Alliance for American Manufacturing, a group that supports American manufacturing, stated in a report last month that “the introduction of cheap Chinese autos—which are so inexpensive because they are backed with the power and funding of the Chinese government—to the American market could end up being an extinction-level event for the U.S. auto sector.”

From just 130,970 all-electric cars in 2020, BYD sold 1.57 million battery-electric vehicles last year. By late 2023, it had surpassed Tesla to become the world’s largest manufacturer of electric vehicles thanks to that rise in sales.

Tesla CEO Elon Musk warned in January that Chinese manufacturers will “demolish” international competitors in the absence of trade obstacles due to the growth of BYD and other Chinese automakers.

According to Bernstein BYD’s expansion, which includes non-EV sales, has resulted from the company delivering more cars outside of China: About 10% of BYD’s over $3 million in sales last year came from overseas markets, which is a doubling of the percentage from the start of the year.

An inquiry for comment from BYD was not answered.

How the Seagull compares

Operating a Seagull has little distinction from operating a Chevrolet Bolt, Nissan Leaf, or BMW i3. It picks up speed quickly. Everything is silent. It features attractive screens and a combination of soft and plastic touch elements, including supportive and cozy seating.

The Seagull is somewhat smaller than GM’s now-canceled Chevrolet Bolt EV. In Latin America, it is also referred to as the BYD Dolphin Mini.

Its stated range of up to around 190 miles on a single charge (or 250 miles for some versions) is comparable to many first-generation all-electric vehicles but less than many EVs now on sale in the United States. The car has a top speed of only 80 mph and 74 horsepower, which is much slower than most EVs that are now available for purchase in the United States.

However, Caresoft claims that the construction, batteries, and part sourcing are where the main differences lie.

The consulting firm disassembled the BYD Seagull in order to compare the tiny EV against cars from established automakers and other startups. The Livonia, Michigan-based company, which has multiple locations worldwide, has dismantled and compared over thirty China-made electric vehicles (EVs) from manufacturers such as BYD, Nio, XPENG, and others.

Caresoft examines every component of a car, including the engines, seats, battery casings, fasteners, and latches, both physically and digitally. It then ascertains how its customers, who are primarily suppliers and automakers, might reduce costs and increase efficiency in their goods.

When the BYD Seagull was first studied, it was discovered to be simply and effectively conceived, engineered, and operated, but it also had unanticipated quality and predicted reliability.

“What they accomplished is really well done,” Woychowski remarked. “It’s executed effectively.”

It is a well-equipped car for the money. (BYD even reduced the vehicle’s beginning price by 5% earlier this month; it was previously priced at about $11,000.)

At the Chicago Federal Reserve’s January automotive conference, Caresoft CEO Mathew Vachaparampil stated that even with the low pricing, the company still earns “some money” on the Seagull or at the very least breaks even.

The Seagull would need to incur extra costs in order to comply with federal vehicle regulations in the United States before BYD could sell it there. However, the EV might still be able to be purchased in the United States for tens of thousands of dollars less than the average cost of an EV in the country, which is currently more than $52,000 according to Cox Automotive.

Last month, BYD said that the Seagull/Dolphin Mini EV would go on sale in Mexico for 358,800 pesos, or roughly $20,990.

According to Caresoft, BYD has achieved success in its battery technology, internal sourcing, or vertical integration, and part production. Above all, BYD has developed battery technologies that are significantly less expensive to manufacture than the lithium-ion batteries that are often found in electric vehicles (EVs) in the United States.

Build Your Dreams, or BYD, is a Chinese automaker that gained notoriety for its “Blade” battery innovations, which were first introduced in cellphones.

Its emphasis on vehicle efficiency is similar to that of US EV leader Tesla, which has also been successful in bringing down the price of its vehicles over time.

It is only recently that conventional automakers have begun to try to imitate elements of Tesla’s operations, such as its gigacasting production process and vertical integration of key components like motors, batteries, and other parts. Tesla adjusts quickly as well.

For instance, the floor is gone from the Tesla Model 3. A conventional vehicle body at the base is replaced by the car’s extremely secure battery box. Changes like the ones made at Tesla over the past several years would normally need a complete vehicle redesign at a traditional automaker.

BYD adjusts just as quickly. The business has released updated and new items fast. Its production has also grown quickly; at present, it is targeting plants in Thailand, Brazil, Indonesia, Hungary, Uzbekistan, and possibly Mexico.

The corporation is becoming a greater danger to its international competitors when you include in other benefits like government assistance, reduced labor expenses, and increased production capacity.

escalating worries

The growth of BYD coincides with unstable conditions for the global auto sector.

American traditional automakers have decreased in both China and their home market, while Chinese automakers are growing.

With the entry of Japanese automakers like Toyota Motor, Nissan Motor, and Honda Motor as well as, more recently, South Korean car behemoth Hyundai Motor and its Kia division, their market share in the United States has decreased.

Industry data shows that the so-called Big Three U.S. automakers—GM, Ford, and Chrysler, which is currently owned by Stellantis—have seen a decline in their U.S. market share from 75% in 1984 to roughly 40% in 2023.

Legislators in Europe have opened an investigation into the emergence of China-made EVs, while politicians in the United States have targeted Chinese imports out of worry for their home car sectors.

As we are developing this amazing manufacturing backbone in the United States, we are really concerned about China bigfooting our industry,” Energy Secretary Jennifer Granholm stated on March 6 during a panel discussion at an Axios event.

Sen. Marco Rubio, a Republican from Florida, has suggested dramatically raising the taxes on Chinese auto imports by $20,000 per vehicle in order to prevent China “from flooding U.S. auto markets.”

Currently, imports of electric vehicles (EVs) from China are liable to a 27.5% duty. This comprises a 2.5% duty that is normally applied to imported automobiles in addition to a 25% tariff on vehicles built in China that was implemented in 2018 by the Trump administration.

However, Chinese automakers might continue to construct in Mexico and use the USMCA, formerly known as the North American Free Trade Agreement, or NAFTA, to import cars into the United States from Mexico.

But in the event that he is elected to a second term, former President Donald Trump—who is leading the Republican field in the 2024 presidential contest—suggested on Saturday that if Chinese automakers produce automobiles in Mexico, they should face a 100% tariff.

Over time, we’ve observed that automakers eventually make their way into every significant market. In the end, the Chinese will travel to the United States, according to Marin Gjaja, the chief operating officer of Ford’s electric vehicle division, in a recent CNBC interview.

Ford can “get really, really competitive on the technologies that customers want,” according to Gjaja, and become more effective in attracting customers even though it has little control over laws or its growth into China.

Woychowski argues traditional automakers need to adapt fast in order to compete with Chinese firms like BYD.

Before automobiles like the BYD Seagull arrive on American soil, he claimed that businesses like the Detroit automakers must reconsider their century-old policies, practices, and other operations in order to better compete against Chinese automakers.

“You must acquire knowledge. He stated, “You have to unlearn and you have to do it quickly.” “You shouldn’t continue doing something just because you’ve been doing it for a century. It’s no longer appropriate.”