While the U.S. keeps Chinese automakers at arm’s length with newly announced tariffs to protect its century-old domestic auto industry, Europe is already seeing an influx of affordable EVs from that country. Now we see the debut of one of the most important ones yet: the BYD Seagull, starting at just under $10,000 in its home market.
This kicks off today’s Critical Materials, your daily roundup of news and events shaping up the burgeoning EV industry. Also in today’s newsletter: Tesla slashes Model Y production at the Gigafactory Shanghai in the wake of declining sales and brutal competition, and Lucid Motors cuts 400 jobs as it aims to restructure and reduce costs.
30%: Sub-$10,000 BYD Seagull To Enter Europe Next Year
Legacy brands in Europe need to brace for impact. The highly acclaimed BYD Seagull, also known as the BYD Dolphin Mini in Mexico, will land in Europe next year. It’s not a straightforward path for BYD to sell the EVs at irresistible prices in Europe as it does in China or Mexico. Despite this, BYD executives are confident that the Seagull will be highly competitive in the European market.
The Seagull is a great representation of how far Chinese EVs have come in terms of price and quality. Starting at $9,700 (69,800 yuan), the mini EV is powered by BYD’s cutting-edge Blade batteries, available in either 30 kilowatt-hour or 38 kWh capacities. That’s enough to deliver 190 miles (305 km) and 252 miles (405 km) of CLTC range.
Despite the low price, BYD has stuffed it with premium features. It offers a large 10.1-inch infotainment screen and items like cruise control and fast wireless charging. And that means European automakers like Renault and Stellantis will need to pull up their sleeves and make their products more competitive.
Here’s what Bloomberg has to say about the Seagull arriving in Europe next year:
Even after tariffs and modifications to meet European standards, BYD executives have pledged to sell the Seagull for less than €20,000 ($21,500).
That would price the four-seater thousands below electric runabouts that Stellantis NV, Renault SA and others are counting on to help them bridge the energy transition.
“We are looking very closely at this model and others coming from Chinese EV makers,” said Martin Sander, head of Ford Motor Co.’s European EV business. “Of course, we are nervous when new competition is coming to the market.”
BYD might encounter some roadblocks from the European Commission, which is investigating claims of large Chinese state subsidies that have allegedly led to unnaturally low prices of EVs like the Seagull.
The result of that investigation is expected sometime in July. Regardless of where that goes, BYD aims to blunt EU tariff impacts with localized production, thanks to an upcoming factory in Hungary.
60%: Tesla Slashes Model Y Production At Giga Shanghai
Amid weakening demand and brutal competition in China, where over 100 brands are battling it out for a share of the EV market, Tesla is lowering the production of its best-selling EV. As a reminder, China is Tesla’s second largest market globally, and home to the Gigafactory Shanghai, Tesla’s largest plant by production capacity and a major export hub.
But the Model Y, which went on sale in the U.S. in 2020, and in China in 2021, has been aging. Tesla told its delivery advisors in February that there was no refreshed Model Y in the pipeline for this year in the U.S. However, China might see an updated version sooner as Tesla China is reportedly in charge of the development.
Here’s an excerpt from Reuters this morning:
The Shanghai plant, Tesla’s biggest manufacturing hub globally, planned to cut Model Y output by at least 20% during the March to June period, said the person, who declined to be named as the matter is private.
Data from the China Association of Automobile Manufacturers (CAAM) showed the output of Model Y in China stood at 49,498 units in March and 36,610 in April, 17.7% and 33% lower, respectively, compared to a year ago.
In total, Tesla produced 287,359 units of Model Y and Model 3 cars in China in the first four months, 5% lower than the same period in 2023, with Model 3 output 10% higher, CAAM data showed.
It’s unclear if Tesla also plans to cut back Model Y production in the U.S. and Europe, or potentially even extend the cuts to the Model 3, which recently got a much-needed refresh.
It’s also possible that brands like Xiaomi are eating into Tesla’s market share in China. The tech giant, which recently launched its SU7 electric sedan to an overwhelmingly enthusiastic reception, said yesterday that it was increasing its production forecast for 2024 from 100,000 units to 120,000 units.
On a more positive note, the news wire’s source said that despite the production cuts this quarter, Tesla’s goal of selling 2 million EVs globally this year remains unchanged. As the brand pivots to artificial intelligence and robotaxis, how it plans to achieve that goal is anybody’s guess.
90%: Lucid To Lay Off 400 Workers In Restructuring Effort
Layoffs in the EV industry aren’t limited to just Tesla or Ford. Startups like Rivian and now Lucid are feeling the heat, as demand for EVs cools down amidst high interest rates, a bigger-than-expected shift toward hybrids, and rising competition.
The California-based maker of the Air electric sedan said on Friday that it would reduce its U.S. workforce by 6%. These layoffs would impact some 400 workers at all levels, including those in leadership positions and mid-level managers, CEO Peter Rawlinson said in an email, according to Reuters.
From the news wire this morning:
Lucid Group will reduce its workforce in the United States by 6%, or around 400 employees, it said on Friday, becoming the latest electric vehicle maker to cut jobs as the industry grapples with slower growth.
The company had a total of around 6,500 full-time employees globally, as of December last year, its latest annual filing showed.
Lucid expects to incur a total of around $21 million to $25 million in charges related to workforce reduction and expects to complete the plan by the end of the third quarter of 2024.
Lucid lost over half a billion dollars in the first quarter of 2024, the brand said in its earnings report. So clearly, it has a long road ahead. However, strong backing from Saudi Arabia’s Public Investment Fund likely ensures its short-term survival. Moreover, the upcoming Gravity three-row family SUV should unlock a new pool of buyers and reduce Lucid’s losses.
It has also promised a $48,000 Model Y rival, expected to arrive by 2026. If Lucid can survive till then, and ramp up production, the mid-size crossover could be a real game changer for the brand.
100%: Should Tesla Fast-Track The Refreshed Model Y?
We drove the re-styled Model 3 recently and found that it does a remarkable job fixing its predecessor’s flaws and offers unmatched features and performance. It’s a shame that Tesla isn’t offering the same recipe for the Model Y, which is an even bigger seller.
I certainly think that an updated Model Y would help Tesla regain some of its lost mojo. Do you think that it could be a bright spot for a brand in turmoil? Leave your thoughts in the comments.
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