SHANGHAI (Reuters) – Elon Musk has said the only thing holding back electric vehicle (EV) sales is their price.

Companies like BYD are solving that problem in China – and getting ready to solve it for the world.

China’s largest EV maker unveiled this week the Seagull at the Shanghai auto show, shocking analysts and rivals with the car’s specs: a battery range of more than 300 kilometers (186 miles) and a starting price of just over $11,000 – about a quarter of the price of most EVs now on the market in Europe.

“The Seagull is another manifestation of the aggressive deflationary pressures coming from (Chinese) automakers,” Morgan Stanley analyst Adam Jonas said in a note for investors, predicting a “more aggressive push” from Chinese companies to sell entry-level EVs outside China.

Musk’s Tesla cut prices in the U.S. for the sixth time since the start of the year on Tuesday, looking to drive demand in the face of economic uncertainty and growing competition. Tesla’s price cuts have prompted other automakers, including in China, to follow suit.

But the Shanghai show and the Seagull highlight a related dynamic: Chinese automakers are now leading the world in making EVs that compete on price and technology for the average budget.

And many more of those cars from BYD and its rivals will be headed to Europe, Southeast Asia and other overseas markets, threatening established automakers, executives and analysts said.

Patrick Koller, chief executive of French auto supplier Faurecia, said the entry-level EV market in Europe was an open lane for Chinese automakers.

“I think an attractive car for Chinese consumers will be an attractive car for a European consumer,” he told Reuters.

Koller said he had met with the CEO or chairman of more than two dozen Chinese automakers in Shanghai. Many are looking to export to Europe, he said.

Because of their “fantastic competitive advantage,” Koller predicted Chinese automakers could look to sell one million cars per year in Europe, equivalent to 8% of the market last year.

‘OUR FAIR SHARE’

Nio, which competes against the likes of BMW with its premium electric cars in China, said this week it would launch a new, more affordable EV brand with its first target market Europe, and is also evaluating the U.S. market.

“If the overall user experience we can provide to European users is better somehow, we can establish our competitiveness,” Qin Lihong, Nio’s president said. “We can get our fair share.”

Zeekr, a premium EV brand held by China’s Geely, said it would be in most European markets by 2026.

Other established automakers are taking advantage of China’s more competitive supply chain by exporting from China. BMW, for example, exports the iX3 from China to Southeast Asia and Europe.

Renault’s Dacia ships the Spring EV, an entry-level hatchback like the BYD Seagull, to Europe and ranked as the second-largest EV exporter from China last year after Tesla.

Tesla shipped more than 271,000 Model Y and Model 3 sedans from its Shanghai factory last year to Europe and other markets, roughly a fifth of its sales.

But the biggest rise in exports is coming from Chinese automakers. China’s car exports grew four-fold between 2020 and 2022 to top two million vehicles. Exports of all vehicle types are on track to top three million vehicles this year if the first-quarter pace is sustained.

BYD’s exports were up four-fold just last year, nearing 56,000 vehicles, led by its Yuan Plus EV, data from the China Association of Automobile Manufacturers shows.

BYD has not announced export plans for the Seagull, which is priced below what is now the best selling EV in China, the BYD Dolphin, which is priced from 116,800 yuan ($17,000) in China. BYD will start delivering Dolphin in Europe from the fourth quarter.

“Maybe we see it in Rome, Warsaw or Lisbon sooner than later,” Morgan Stanley’s Jonas, said of the hatchback. “No wonder Tesla keeps cutting price.”

(Reporting by Zhang Yan and Casey Hall; Writing by Kevin Krolicki; Editing by Mark Potter)

tagreuters.com2023binary_LYNXMPEJ3I0A2-VIEWIMAGE

tagreuters.com2023binary_LYNXMPEJ3I0A4-VIEWIMAGE

tagreuters.com2023binary_LYNXMPEJ3I0A5-VIEWIMAGE

tagreuters.com2023binary_LYNXMPEJ3I0A0-VIEWIMAGE

tagreuters.com2023binary_LYNXMPEJ3I0A1-VIEWIMAGE