Chinese cars in Europe are twice as expensive as those in the domestic market.

Giá ô tô Trung Quốc ở châu Âu đắt gấp đôi so với xe tại thị trường nội địa - 1 — BYD's booth at the 2023 Munich International Motor Show in Germany (Photo: BYD).

US and European officials are concerned that their auto industries could be threatened by the influx of cheap Chinese electric vehicles. But so far, China’s No. 1 electric vehicle maker, BYD, has been raising export prices much higher than domestic prices, rather than cutting prices to compete.

The goal is to achieve a level of profit that they cannot achieve in China due to fierce competition between domestic brands.

In some overseas showrooms, BYD sells its three key models at prices more than double, sometimes even nearly triple, what they cost in China, according to a Reuters survey of BYD's five biggest export markets.

For example, the BYD Atto 3, a small electric crossover, costs the equivalent of $19,283 in China for the mid-range version, while in Germany it costs more than twice as much - $42,789, but is still cheaper than many other electric cars of the same type in Germany.

BYD has not yet commented on the matter. In March, Chairman Wang Chuangfu told investors in a closed-door meeting that BYD expects exports to boost profits this year, as the domestic price war eats into the company’s profits.

Many other automakers are also adopting a similar strategy to BYD.

Research shows that Chinese automakers often sell cars at lower prices than European brands, despite equipping them with features and equipment typically found only on more expensive models from traditional manufacturers.

Still, even with the added costs of shipping, such a price increase for Chinese cars in Europe, compared to their domestic counterparts, still translates into thousands of dollars in profit for each electric car sold.

This is because Chinese automakers have streamlined costs at every stage of the manufacturing process, from battery production to raw material mining.

According to market research firm Benchmark Mineral Intelligence, batteries cost 18% less in China than elsewhere. A company like BYD, which makes its own batteries, can negotiate prices higher or lower further down the supply chain, while Chinese automakers also benefit from state-backed land, cheap electricity and cheap labor. All of this makes Chinese cars cheaper than established European brands.

According to Reuters , in some export markets, the BYD Atto 3 model is sold at a price 81% to 174% higher than in China. Dolphin cars are priced 39% to 178% higher; for example, in Germany, a BYD Dolphin costs the equivalent of $37,439, while in China it is only $16,524. Seal cars are priced 30% to 136% higher.

Meanwhile, in Germany, Tesla sells its China-made Model 3 for only 37% more than in China.

Many European carmakers may worry that large profit margins will give Chinese carmakers the ability to cut into profits whenever they want to expand their market share abroad.

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