Top Chinese electric vehicle (EV) makers like BYD, which may see their export prospects reduced amid a European anti-subsidy investigation, enjoy an overwhelming cost advantage over global rivals and will resolutely expand production globally in the coming years, according to a USB forecast. Efficient control of the supply chain and a cost edge in batteries will make Chinese electric cars more attractive to overseas customers, while China’s challenging economic outlook will intensify globalization efforts by BYD and its domestic rivals, according to the Swiss bank. “We expect a handful of Chinese EV leaders to expand their production footprint globally, with Europe being a top priority,” said UBS Analyst Paul Gong. The vast size of the European market and its surging EV adoption rate – likely to hit 100% of sales by 2035 – will provide a catalyst for Chinese EV makers’ go-global push. Gong singled out BYD, the world’s largest EV builder backed by Warren Buffett’s Berkshire Hathaway, as one of the Chinese top carmakers to extend its reach beyond mainland China. He did not name a second player.
UBS predicted that Chinese-made cars, benefiting from a faster pace of electrification in the world’s automotive sector, will control 33% of the global market by 2030, up from 17% last year. Established international marques that mainly build petrol vehicles, including Volkswagen and Toyota, will largely lose market share over the next seven years, falling to a combined 58% of global automotive sales by 2030, down from 81% now, Gong said. Elon Musk’s Tesla will hold an 8% market share worldwide that year, quadruple its 2% today. The bold forecast comes after the European Commission (EC) launched an anti-subsidy investigation into Chinese-made EVs. The investigation could result in tariffs higher than the standard 10% rate, but it will take the Commission as long as 13 months to assess whether to impose such tariffs.
In a UBS teardown report, the bank found that BYD’s pure electric Seal sedan has a cost advantage over Tesla’s Model 3 assembled in mainland China. The cost of building a Seal, a potential rival to the Model 3, is 15% lower, the report said. In Europe, the Seal has a sustainable 25% cost advantage over rivals, even with growing trade barriers such as tariffs factored in, the report showed. By 2030, Chinese carmakers will take a 20% share of the market, or about 2 million units, in Europe, and most of the vehicles sold on the continent will be powered by batteries, it added.
David Zhang, a visiting Professor at Huanghe Science and Technology College in Zhengzhou, Henan province, said a would-be punitive tariff slapped on Chinese EVs in Europe would hugely disrupt the global automotive industry. Beijing would retaliate against European carmakers such as BMW and Mercedes-Benz, whose premium models have been well received by wealthy Chinese consumers over the past decade, he said, as reported by the South China Morning Post.
