Tiny Chinese EV poses big threat to US car industry as it's sold for just $12,000

The Seagull electric vehicle from Chinese automaker BYD is displayed at a showroom in Beijing

The Seagull, a compact and well-constructed Chinese EV, is sending shockwaves through the US auto industry.

Launched last year, the Seagull's price tag of about $12,000 in China is turning heads, especially considering its impressive drive and quality that rivals American EVs costing three times as much. There's even a version under $10,000 for those looking for shorter ranges.

For now, hefty tariffs on Chinese imports are keeping the Seagull at bay from the US market, where it would likely cost more than $12,000 if it were to be imported. However, the swift rise of inexpensive EVs from China threatens to disrupt the global car market in a manner reminiscent of the Japanese automotive invasion during the 1970s oil crises.

BYD, short for "Build Your Dreams," might just become the US auto industry's worst nightmare. "Any car company that's not paying attention to them as a competitor is going to be lost when they hit their market," warned Sam Fiorani, vice president at AutoForecast Solutions near Philadelphia. "BYD's entry into the U.S. market isn't an if. It's a when."

With the Biden administration set to announce a 100% tariff on electric vehicles imported from China this Tuesday, it's clear that US politicians and manufacturers view Chinese EVs as a formidable threat to national security and American jobs. The Alliance for American Manufacturing has issued a stark warning in a recent report, suggesting that government-subsidized Chinese electric vehicles (EVs) "could end up being an extinction-level event for the US auto sector."

Earlier in the year, Tesla's boss Elon Musk made waves by claiming that Chinese EVs are so advanced that without trade barriers, "they will pretty much demolish most other car companies in the world." While EVs outside China often come with hefty price tags targeting wealthier consumers, Chinese manufacturers are rolling out affordable models for everyday buyers, aligning perfectly with global governmental drives to ditch petrol cars in the battle against climate change.

In a sprawling garage near Detroit, a firm named Caresoft Global meticulously dissected and reassembled a vibrant green Seagull, which their China division acquired and sent stateside. Terry Woychowski, who once spearheaded engineering for General Motors' pickups and now presides over Caresoft Global, described the vehicle as a "clarion call" to America's automotive sector, which lags significantly behind China in crafting cost-effective EVs.

Post-analysis, Mr Woychowski expressed his concern about whether American carmakers can pivot effectively. He remarked, "Things will have to change in some radical ways in order to be able to compete,".

It's not just one revolutionary trick that allows BYD to produce the Seagull at such a low cost. Instead, mr Woychowski observed that the entire vehicle, capable of 252 miles (405 kilometers) on a single charge, is "an exercise in efficiency."

The higher labour costs in the US are part of the equation. BYD manages to keep costs low due to its expertise in battery-making, particularly with lithium iron phosphate chemistry used in consumer products. These batteries are cheaper but have a lower range than most current lithium-ion batteries.

"Americans are still learning to make cheaper batteries," Mr Woychowski stated. BYD also manufactures many of its own parts, including electric motors, dashboards, and bodies, utilising its massive scale - with 3 million vehicles sold worldwide last year - for cost savings.

Mr Woychowski explained that the company designs vehicles with cost and efficiency in mind. For example, the Seagull model has only one windshield wiper, eliminating one motor and one arm, saving on weight, cost and labour to install.

He pointed out that US automakers don't often design vehicles this way and incur excess engineering costs. The efficiency results in weight savings that accumulate, allowing the Seagull to travel further per charge on a smaller battery.

"So Detroit needs to quickly re-learn a lot of design and engineering to keep up while shedding practices from a century of building vehicles," he said. Despite these cost-saving measures, the Seagull still maintains a quality feel. Doors close solidly.

The grey synthetic leather seats feature stitching that matches the body colour, a detail usually found in pricier cars. The Seagull tested by Caresoft comes equipped with six air bags and electronic stability control.

To meet US safety standards, which are stricter than those in China, BYD would need to modify its cars. Caresoft hasn't conducted crash tests yet, but Mr Woychowski estimates this would add $2,000 to the price tag.

The Seagull, also known as the Dolphin Mini, is sold by BYD in four Latin American countries for around $21,000. This higher price includes transportation costs and reflects the potential for greater profits in less competitive markets than China.

Last year, BYD said that it was "still in the process" of deciding whether to sell cars in the US It is considering factory locations in Mexico for the Mexican market.