China's electric cars are becoming slicker and cheaper - but is there a deeper cost?

China's electric cars are becoming slicker and cheaper - but is there a deeper cost?

2 days ago Share Save Theo Leggett International Business Correspondent Share Save

BBC

Listen to Theo read this article In China, they call it the Seagull, and it has looks to match. It is sleek and angular, with bright, downward-slanting headlights that have more than a hint of mischievous eyes about them. It is, of course, a car. A very small one, designed as a cheap city runabout – but it could have huge significance. Available in China since 2023, where it has proved extremely popular, it has just been launched in Europe with the name Dolphin Surf (because Europeans apparently aren't as keen on seagulls as Chinese people). When it goes on sale in the UK this week, it's expected to have a price tag of around £18,000. That will still make it, for an electric car on western markets, very cheap indeed. It won't be the outright lowest-priced model on offer: the Dacia Spring, manufactured in Wuhan jointly by Renault and Dongfeng, and the Leapmotor T03, which is being produced by a joint venture between Chinese startup Leapmotor and Stellantis, both cost less. But the Dolphin Surf is the new arrival that has long-established brands most worried. That is because the company behind it has been making ever bigger waves on international markets.

Bloomberg via Getty The BYD Dolphin Surf will be priced at around £18,000 in the UK - ultra cheap for an EV

BYD is already the biggest player in China. It overtook Tesla in 2024 to become the world's best-selling maker of electric vehicles (EVs), and since entering the European markets two years ago, it has expanded aggressively. "We want to be number one in the British market within 10 years," says Steve Beattie, sales and marketing director for BYD UK. BYD is part of a wider expansion of Chinese companies and brands that some believe could change the face of the global motor industry – and which has already prompted radical action from the US government and the EU. It means once-unknown marques like Nio, Xpeng, Zeekr or Omoda could become every bit as much household names as Ford or Volkswagen. They will join classic brands such as MG, Volvo and Lotus, which have been under Chinese ownership for years. The products on offer already encompass a huge range, from runabouts like the tiny Dolphin Surf to exotic supercars, like the pothole-jumping U9, from BYD's high-end sub-brand Yangwang. "Chinese brands are making massive inroads into the European market," says David Bailey, professor of business and economics at Birmingham Business School. In 2024, 17 million battery and plug-in hybrid cars were sold worldwide, 11 million of those in China. Chinese brands, meanwhile, had 10% of global EV and plug-in hybrid sales outside their home country, according to the consultancy Rho Motion. That figure is only expected to grow. For consumers, it should be good news – leading to more high-quality and affordable electric cars becoming available. But with rivalry between Beijing and western powers showing no sign of subsiding, some experts are concerned Chinese vehicles could represent a security risk from hackers and third parties. And for established players in Europe, it represents a formidable challenge to their historic dominance. "[China has] a huge cost advantage through economies of scale and battery technology. European manufacturers have fallen well behind," warns Mr Bailey. "Unless they wake up very quickly and catch up, they could be wiped out."

Cut-throat competition in China

China's car industry has been developing rapidly since the country joined the World Trade Organisation in 2001. But that process accelerated rapidly in 2015, when the Communist Party introduced its "Made in China 2025" initiative. The 10-year plan to make the country a leader in several high-tech industries, including EVs, attracted intense criticism from abroad, and particularly the US, amid claims of forced technology transfers and theft of intellectual property – all of which the Chinese government denies. Fuelled by lavish state funding, the plan helped lay the groundwork for the breakneck growth of companies like BYD – originally a maker of batteries for mobile phones – and allowed the Chinese parent companies of MG and Volvo, SAIC and Geely, to become major players in the EV market. "The general standard of Chinese cars is very, very high indeed," says Dan Caesar, chief executive of Electric Vehicles UK. "China has learned extremely quickly how to manufacture cars."

Yet competition in China has become ever more cut-throat, with brands jostling for space in an increasingly saturated market. This has led them to hunt for sales elsewhere. While Chinese firms have expanded into East Asia and South America, for years the European market proved a tough nut to crack – that is, until governments here decided to phase out the sale of new petrol and diesel models. The transition to electric cars opened the door to new players. "[Chinese brands] have seen an opportunity to get a bit of a foothold," says Oliver Lowe, UK product manager of Omoda and Jaecoo, two sub brands of the Chinese giant Chery.

STR via Getty BYD overtook Tesla in 2024 to become the world's biggest-selling EV manufacturer

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