China To See Surge In Exports Post EV Cost Reductions

The Seagull, China's largest EV manufacturer, debuted the car this week at the Shanghai auto show, surprising analysts and rivals with its specs: a battery range of more than 300 kilometres (186 miles) and a starting price of just over $11,000 - roughly a quarter of the price of most EVs currently on the market in Europe.

"The Seagull is another manifestation of the aggressive deflationary pressures coming from (Chinese) automakers," Morgan Stanley analyst Adam Jonas wrote in an investor note, forecasting a "more aggressive push" by Chinese businesses to sell entry-level EVs outside of China.

On Tuesday, Musk's Tesla slashed prices in the United States for the sixth time since the beginning of the year, hoping to boost demand in the face of economic uncertainty and increased competition. Tesla's pricing cutbacks have inspired other automakers to follow suit, including those in China.

However, the Shanghai exhibition and the Seagull reveal a similar dynamic: Chinese manufacturers are currently leading the world in developing EVs that compete on price and technology for the average consumer.

Many more BYD and rival vehicles will be exported to Europe, Southeast Asia, and other international markets, posing a threat to established manufacturers, executives and analysts said.

According to Patrick Koller, CEO of French car supplier Faurecia, the entry-level EV market in Europe is an open lane for Chinese manufacturers.

"I think an attractive car for Chinese consumers will be an attractive car for a European consumer," he explained.

Koller stated that he visited with the CEO or chairman of over a dozen Chinese automakers in Shanghai. Many are looking to export to Europe, according to him.

Koller estimated that Chinese automakers might sell one million automobiles per year in Europe due to their "fantastic competitive advantage," equivalent to 8% of the market last year.