BYD Is Now Selling This Competitive EV For Under $10,000

Last year I wrote that the BYD Seagull was the most important car that debuted last year, and certainly the most important one named after an Anton Chekov play. That was back when this thing cost about $14,000 in China. Due to an ongoing price war in China, BYD has managed to drop that price below $10,000. How?

A price war is about the only war that I have any stomach for at the moment, but eventually, a price war turns into a trade war, and the EU is considering proactive/retroactive tariffs as it investigates if Chinese cars are unfairly subsidized (hint: they are, as are European cars). Nissan dealers appear to be in their own protracted battle against Nissan and its addiction to fleet sales.

And, finally, we’ll talk about Our Next Energy.

This Thing Costs $9,700 If You Can Believe It

Sure, Chinese cars have been subsidized by the government. Yes, they have benefited from a huge national effort to be good at batteries. Yes, Chinese automakers probably learned a lot from joint ventures with U.S. companies. Yes, Chinese automakers benefit from laxer environmental regulations and fewer moral compunctions when it comes to either child labor in the Congo or slave labor.

None of that is a guarantee that you can build a good car. Decades of government-backed car companies utilizing questionably motivated labor in the Soviet Union never managed to produce a truly great car.

Chinese automaker BYD’s Seagull (Dolphin Mini elsewhere) is an attractive city car with a reasonable range of about 130-180 miles (depending on the measure you’re using). At $14,000 it was a steal. At $9,700 I don’t even have words for it. This car will cost about $21,000 in Mexico and even that seems like a decent deal for a roughly Honda Fit-sized subcompact EV city car.

The how of this is important and has a lot to do with BYD’s huge lead and huge scale. The why is even more important, and I’ll look to this Reuters report on China’s wild price war for more information:

BYD has become a relentless discounter in the price war Tesla began in the world’s largest auto market last year. That aggressive stance has helped it unseat its U.S. rival as the world’s biggest seller of electric vehicles even if most of BYD’s cars are sold in China.

I enjoy the mention there that, essentially, Tesla started this price war and seems to be losing it. You come for the king, you best not miss, as Joey Tribbiani once famously stated.

The next question is, of course, what happens to margins if you discount this much? Tesla has already struggled with lower-than-usual margins in its price war. Reuters addresses that as well:

Gross profit margins for the Warren Buffett-backed automaker have to date held up reasonably well. It logged a 22% margin in the third quarter, up from 18.7% in the second quarter, according to Reuters calculations.

That’s not bad!

EU Is Thinking About Retroactive Tariffs Against Chinese EVs

I’ve already written at length about the general hypocrisy of the EU’s investigation into whether or not Chinese cars are unfairly subsidized. Sometimes it’s ok to be a hypocrite, however, and I don’t necessarily blame European Union officials for being worried about the sudden influx of cheap Chinese electric cars.

But, because the EU is a big European bureaucracy, it has to do the whole let’s-investigate-it thing. That’s nice and all, but the volume of Chinese car imports has risen 11% since October. There’s not enough time to wait.

In order to address this timing issue, the EU is saying it’s going to start keeping track of every import into the company so that, if the investigation finds out something fishy is going on, it can retroactively charge duties on those vehicles that are already here and, presumably, already sold to consumers.

From The South China Morning Post:

The document says that if the EU waited to impose duties, its own manufacturers would “suffer from diminishing sales and reduced production levels if imports continue at the current increased levels”.

It can also be assumed that the commission is satisfied it has enough evidence to put duties on EVs made in China, but wants to expedite the process.

The note, which was published in the EU’s official journal on Wednesday, said that regarding subsidies, “the commission has at its disposal sufficient evidence tending to show that imports of the product concerned from the PRC [China] are being subsidised”.

I’m shocked, shocked that there are unfair government subsidies going on in this establishment!

Beijing is almost certainly going to get big mad about this and who knows where it goes, but I think even that great poet Nelly would note that our Trade Cold War is getting hot in here, though, given the folks involved, I suggest everyone keep their garments on.

Nissan Dealers: ‘We’re Getting Crushed’

There are many reasons why, if you’re a dealer, you don’t want your parent company to dump a lot of its cars to fleets. The biggest is that it’s bad for residual values as fleets, specifically rental car companies, turn over cars quickly, meaning a flood of cheap and relatively new cars (depending who borrows them) that make it harder for you to charge for your actual new version.

I highly suggest you read this piece in Automotive News because it’s thorough and extremely brutal about Nissan, which is going back to its old ways of relying on fleet sales. The data is great, specifically that 44% of February sales volume went to fleets, and that about 25% over the first 11 months of fiscal 2023 also ended up as fleet sales.

But the quotes, it’s the quotes. The quotes are rough:

Nissan’s dependence on rental fleets to move metal is “catastrophic” for its retailers, said a dealer, one of four interviewed for this article. They asked not to be identified for fear of retaliation from the automaker.

“Nissan is selling around the dealer network, half of whom are already unprofitable,” the dealer said.

Here’s another one:

“We’re getting crushed,” one of the dealers said. “Honda is selling 100,000 a month, Toyota is selling 170,000, and we’re selling 30,000.”

Dealership lots are piling up with last year’s models, including reportedly more than 30,000 Rogue and nearly 5,000 Ariya crossovers.

This is bad for consumers as well. There are consumers who bought a Nissan Rogue in 2022 or early 2023 and paid above MSRP and still owe money on that car, which means when values plummet they’re underwater and, as one dealer put it, “will never get out of their Nissan.”

‘Our Next Energy’ Lays Off More Staff

Last summer I paid a social visit to a friend at Our Next Energy, the Michigan-based battery startup, and there were so many employees crammed into its HQ that the company had to hire a valet just to park staff cars. I saw a Rivian R1T shoved up on a curb.

This was a big contrast from a couple of years earlier when I shot a video for them at my old company and it felt like ONE was approximately nine people in a big office.

The expected slowdown in the EV market has impacted the company, with CEO and Founder Mujeeb Ijaz moved over into the role of CTO while a new CEO, Paul Humphries, instigating another round of staff reductions.

Per The Detroit News:

The latest reduction includes 37 jobs, 24 of which are in Michigan, as the company deemphasizes administrative roles in favor of its technical work, according to a statement. That’ll leave about 240 employees in Michigan and closer to 270 nationally.

The company is still making batteries as it tries to scale up toward profitability, but it just goes to show that building a battery industry, even with heavy subsidies, is tough work.

What I’m Listening To While Writing TMD

I accidentally ended up at a Gin Blossoms concert a couple of years ago. I was visiting a friend at a ski town and her husband worked there and invited us to the summer event they were having and, lo and behold, the Gin Blossoms were playing. They put on a good show, and this throwback review on Pitchfork of the album’s sad history reminded me to listen to that album:

Since regrouping around the turn of the century, they’ve carried on as a workhorse touring act, sharing ’90s nostalgia packages with bands like Everclear and Sugar Ray and headlining county fairs and gatherings like Canton, Ohio’s Pro Football Hall of Fame Enshrinement Festival Ribs Burnoff or the Mid-South Great Steak Cookoff at Southland Park Gaming and Racing—wherever masses are charring meat outdoors, there’s a chance Gin Blossoms could be there. It’s not a bad living, really.

The Big Question

What was the last car you rented? Did you like it?