China’s plot to flood the West with cheap cars could have a massive effect on the West’s automotive industry.
In recent years, China’s biggest car maker BYD has been making gains in the electric car market with models such as the Atto 3, the Dolphin, and Seal.
However, there are growing concerns that these cheaper products could undermine electric cars made by the likes of Renault, Mercedes, VW, and Tesla as more and more BYDs join Europe and the UK’s roads.
One of the reasons for this has been to do with how China has reorganised its economy to make electric cars a key part of its long-term economic strategy.
President Xi Jinping has said are one of the “pillars of the economy” alongside solar panels and lithium batteries, industries in which the country hopes to dominate.
Furthermore, with demand for cars dropping slightly in their domestic market, more of China’s stock of new electric cars is being moved West, threatening the dominance of established car firms.
Chief executive of Renault Luca de Meo said the situation was so acute that Europeans “find themselves in a position of relative fragility”.
Speaking to the Telegraph about the massive influx of cheap electric Chinese cars into Europe and the UK, Pantheon Macroeconomics’ Duncan Wrigley warned that China had a series of advantages over the West.
Mr Wrigley explained: “It’s already built up enormous scale, manufacturing costs are much lower, and it has all the supply chains.
“In the last three to five years the cost of producing electric vehicle batteries has fallen so much that they no longer need so much direct government support.”
In Europe, president of the European Commission Ursula Von der Leyen warned: “China’s industrial policy today is not only creating much more competitive industrial players.
“Overcapacities in protected industries are flooding global markets and can undermine our industrial base. This will worsen as China’s economy slows down, and its domestic demand does not pick up.”
While some politicians in Europe are concerned about the impact of cheap Chinese electric cars on the automotive markets in the West, some experts have warned reactionary measures may backfire.
Speaking to Forbes, automotive industry lecturer at the United of Applied Sciences FHM Hannover said: “In the next few years, a wave of more than 20 Chinese manufacturers will come to Europe, of which 5-10 will stay.
“Calls for protectionist measures will become louder. We can only hope that politicians decline because then the Chinese will also take protectionist measures. In the end, everyone would lose out, especially consumers.”
