Electric Vehicles: the cost of the China conundrum.??

Fancy getting your hands on a Voyah, an EV brand marketed as an alternative to Tesla? You might be able to from next year, when the Voyah Free is slated to be available to the UK market. But maybe you prefer Zeekr. Or Skywell. Perhaps cars by Seres, Omoda, Nio or Xpeng will be more your speed. ?

Even if these all of these brands are new to you, you might have heard of BYD, the battery-maker founded in 2003. It has since diversified into car-making and, last year, eclipsed Tesla to become the world’s largest manufacturer of electric cars. ?

All of these brands are Chinese, and a lot of them are cheap—really cheap: some are around half the price of equivalent European or US EV brands, and many of them will be on our roads by 2025. The BYD Seagull Honor Edition, a little city runaround, costs around ￡7,600 in its home market, prompting the headline “BYD’s astoundingly cheap electric car sets a record that could spark a new price war” from Tech Radar.

What price EVs?

Tech Radar’s headline may be dramatic, but it’s not alarmist.

Why shouldn’t Chinese EVs sell like hot cakes, when price is the biggest barrier to widespread adoption of EVs in the UK? Soon, consumers will have no choice but to buy EVs or HEVs if they want a brand new car, and the tech billionaires and captains of industry responsible for some of them cannot relate to the average, financially-squeezed consumer when it comes to deciding what “affordable” really means.

As a super-economy, China is well-placed to become a global superpower for EV exports. It has a massive, highly-skilled workforce, strong manufacturing infrastructure and committed government support.

Just how committed that support is has become a contentious issue in Europe: government subsidies have allowed Chinese manufacturers to sell EVs so cheaply that foreign markets effectively become loss-leaders. As The Sunday Times puts it, “concerns have been raised, especially at the European level, of Chinese companies leveraging their government-backed financial muscle to effectively sell their cars at a loss, or at least at a minimal profit, to drive European and British car makers (not to mention American, Japanese and Korean firms) to the wall.”

Adapt or perish

That creates a thorny problem for the UK government: EVs are a societal and humanitarian essential and the (revised) deadline on EV/HEV-only production is 2035. It’s important for our economy that the UK remains a powerhouse of automotive engineering and manufacture. But EVs are still too expensive for a majority of consumers. How does the UK simultaneously help consumers and remain a competitive market?

As the BBC wrote last year, “...should (the UK) fight the rising imports of Chinese electric cars with big new tariffs, in the same way the EU has threatened to do...or should it allow them to continue? Keeping open to the imports in would make it easier for the UK to hit its goal of no new petrol and diesel cars by 2030 (sic) and it would make electric cars cheaper. But the UK car industry could be damaged.” ?

The government’s role

Although the UK government has a keen eye on the situation through the Trade Remedies Authority, which stands “ready to investigate the business practices of Chinese car makers,” Chinese companies are already embedded domestically; Chinese firms now own Lotus, MG and Volvo. BYD will attempt to avoid European trade restrictions by building a factory in Hungary. Chinese money is accelerating our own product development. We need to compete on even terms, but can we?

The next twelve months will likely see a lot of Chinese entrants to the domestic car market; we don’t know how this situation will play out yet, but China’s EV production will impact the government’s appetite to accelerate UK-based R&D for EV and battery technology.

The way forward will almost certainly mean the UK collaborating more closely with the competition. The narrative isn’t just about technology and affordability; it’s also about the UK’s ability to go toe-to-toe with bigger economies in the long term, and compete with them on a global scale.

What caught our attention this month

In response to the rise of Chinese manufacturers, Honda and Nissan are to join forces to develop EV technology.

Mercedes is exploring the use of humanoid robots, collaborating with Apptronik to trial robots for routine tasks in the manufacturing arena.

In a significant boost to the UK's battery capacity, NatPower is set to channel ￡10bn into large-scale storage solutions, targeting to meet 15-20% of the nation's demand by 2040.

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