BYD cars offer great value at prices that beat anything from the West. This month, BYD revealed a plug-in hybrid that offers decent all-electric range and will cost just over $11,000. How can he do this? Like other Chinese manufacturers, BYD benefits from its home country’s lower labor costs, but that only partly explains its success. The fact is that BYD and other Chinese automakers like Geely, which owns the Volvo Cars and Polestar brands, are very good at making cars. They took advantage of China’s dominance of the battery industry and automated production lines to create a juggernaut.
Chinese automakers, notably BYD, represent something new in the world. They signal that China’s decades-long buildup of economic complexity is almost over: While the country once made toys and clothing, then electronics and batteries, it now makes cars and planes. Additionally, BYD and other Chinese automakers are becoming near-global automakers, capable of making electric cars that can compete directly with gasoline cars on cost.
This is, on the face of it, a good thing. Electric cars must become cheaper and more abundant if we are to have any hope of meeting our global climate goals. But this poses immediate and thorny problems for American policymakers. After BYD announced its $11,000 plug-in hybrid, the company posted on Chinese social media platform Weibo that «the price will make gasoline car assemblers tremble.» The problem is that many of these gasoline car makers are American.
Ford and GM planned an ambitious transition to electric vehicles three years ago, but it didn’t take long for them to stumble. Last year, Ford lost more than $64,000 on every electric vehicle sold. Since October, the company has delayed the opening of one of its new electric vehicle battery factories and GM missed the start of its new Ultium battery platform, which was supposed to form the basis of all its future electric vehicles . Ford and GM have scored some wins here (the Mustang Mach-E and Chevrolet Bolt are modest successes), but they don’t compete on the level of Tesla and Hyundai – companies that operate factories in less union-friendly states. the Sun Belt. .
Jim Farley, Ford’s chief executive, recently revealed that the company has a secret development team building a cheap, affordable electric car to compete with Tesla and BYD. But producing electric vehicles profitably is an organizational skill, and like any skill, developing it takes time, effort, and money. Even if Ford and GM now launch innovative new models, they will lag behind their competitors in their successful execution.