China’s electric vehicle industry is certainly facing a squeeze. Recently, the European Union announced its intention to levy import tariffs of up to 36.6% on imported EVs from that country. Simultaneously, the U.S. is weighing a 100% tariff on imported Chinese EVs, and now Canada aims to do the same—which could put a damper on any plans those automakers had to sell over here.
But those moves seem to be delaying the inevitable. None of the Chinese firms are slowing down. The big ones are consistently gaining steam and traction in markets outside of China, and new models are coming out all the time.
This week, two of China’s most prominent EV brands—BYD and Xpeng—announced that they plan for half of their sales volume to come eventually from markets outside of their home country.
Xpeng in particular has been getting headlines for a partnership with Volkswagen that definitely seems to have the German brand learning from the Chinese one. And it debuted a new model this week that shows how serious it is: the Tesla Model 3-sized Xpeng Mona M03 entry-level sedan, which launched for a cheaper-than-expected price of $16,820 (119,000 RMB.) Within a day, Xpeng claimed it had 10,000 firm orders.
Granted, the Xpeng Mona M03 probably isn't as quite on the same level as the Model 3, since it's front-wheel-drive and boasts a cheaper suspension setup. But with a 15.6-inch screen powered by a Qualcomm Snapdragon 8155 chip with 16GB RAM, and range of up to 385 miles (albeit on China's more generous EV testing cycle) it's one hell of an "entry-level" EV. Much more so than the stuff we get, I'd argue.
Whether the Mona M03 itself will appear outside China remains to be seen. But Xpeng's lineup is moving fast into other markets. Xpeng plans for its G6 crossover to enter the UK later this year, and it is actively looking for a suitable location to build a manufacturing plant in the EU too.
Meanwhile, BYD has similar goals. BYD’s Executive Vice President Stella Li said that “[BYD’s] overseas market will account for a relatively large proportion of our global sales in the future,” a statement she would later quantify as nearly half of BYD’s sales. Similarly, Xpeng CEO He Xiaopeng espoused similar ideas during an event celebrating the 10th anniversary of Xpeng held his week. But while BYD didn’t give a specific timeline, Xpeng is targeting that goal to be achieved within the next decade.
These goals are not as lofty as they sound. As China’s car market starts to soften, Chinese brands have picked up the slack in other markets with buyers who find its offerings compelling and price competitive. BYD’s total revenue jumped 26% this quarter, due in part to an increase in shipments and deliveries overseas.
But more importantly, it doesn’t seem like any impending EU tariffs will stop either brand; BYD has been open about its plans to build factories in Turkey and Hungary, but now XPeng has entered the equation, too.
Both BYD and Xpeng’s European production are meant to step around EU tariffs on EVs imported from China, although, it’s not clear if any other political roadblocks will occur if and when either brand gets their respective factories up and running. Although it seems like the tariffs may potentially succeed in staving off any complaints that China would be dumping EVs on foreign markets at prices that Western manufacturers can’t ever hope to match, it doesn’t address the fact that many Chinese EVs still review well and are compelling on their own merits.
Gallery: Xpeng - Mona 03
And that’s a big deal. Xpeng and BYD’s entry to Europe will go hand in hand with other Chinese EV manufacturers' plans to diversify their supply and manufacturing chains out of China in hopes of courting new markets. A few weeks ago, Zeekr announced that it’s considering using existing Volvo and Geely factories outside of China in order to skirt EU tariffs.
BYD is "considering" a factory in Mexico that will almost certainly happen; the mere idea of that causes former president and current GOP nominee Donald Trump to mull whether the Chinese automakers should just build cars in America instead. I can't imagine Ford, General Motors and the rest are happy to hear that.
In other words, it's worth asking: is any of this tariff saber-ratting actually going to work long-term? It certainly isn't causing China's automakers to back off so far.
Contact the author: kevin.williams@insideevs.com
