Why electric cars from China are so cheap?

China's automobile industry is growing at an astonishing rate. In 2023, China became the largest auto exporter in the world, overtaking Japan. In the same year, China's BYD became the largest electric car manufacturer in the world, displacing the previously leading Tesla.

Prices on the domestic market for Chinese electric cars also differ significantly from the prices for the same cars officially sold in Europe:

If we talk about the domestic market in China, there are models such as for example Cherry QQ Ice Cream, the cost of which starts from 4000$. It is a two-seater car with a range of 120 kilometers. Or BYD Seagull, four-seater, range—400 km, and the cost—from 10 000$.

A logical question arises: how do they manage such prices?

Reasons for the cheapness of Chinese electric cars

State support

Since 2009, China has been systematically promoting the development of the electric car industry. In 2010, 5,000 electric cars were sold. And by 2015, 330,000. Also in 2015, China adopted a strategic plan for the development of the manufacturing sector, prioritizing high-tech industries: artificial intelligence, 5G, aerospace, semiconductors, and electric vehicles.

Such companies receive preferential taxation, direct government funding, and reduced-rate loans.

Cheap labor

Historically, labor compensation in China has been low. And while it has risen significantly in recent years, it is still competitive. The average wage for a Chinese worker is 30 yuan per hour (about $4), compared to 12 pounds per hour (about $15) in Britain, for example.

Supply chain localization

In 2022, there will be about 600,000 electric vehicle-related businesses operating in China. Manufacturers can buy almost all the necessary components domestically. Also, China produces about 75% of all lithium-ion batteries in the world, and electric vehicle production is close to the battery manufacturers. Some companies, such as BYD, produce their own batteries. All of this reduces logistics costs. There are also economies of scale due to the large domestic market.

Consequently, foreign companies producing electric cars for the Chinese market have to lower prices to compete with local manufacturers.

Pros of electric cars from China

Price

According to the State Statistics Committee, 16,474 new electric cars were imported into Ukraine in 2024, of which 14,635 were imported from China. As we can see, the Ukrainian consumer votes with hryvnia exactly for Chinese electric cars. And it is easy to understand if you look at the prices. Here is the list of popular models in Ukraine:

Technology

For this price, the buyer gets an advanced high-tech product. And it makes a very strong impression, especially when you transfer from an old foreign car.

Cons

Charging standard. In China, the standard for charging electric cars is GB/T, while in Ukraine the most common standard of charging stations is Type 2. They are not compatible. Adapters from one connector to another exist, but they will not give you the fast charging capabilities that the original standard offers. And you're doomed to find a charging station of the standard you need. In addition, you often see problems during the charging process, when charging does not happen or immediately disconnects.

Software quality. Chinese developers are still on the path of improvement. And the quality of their software sometimes leaves a lot to be desired. They can run slow and be annoyingly illogical.

Software problems. An electric car is a computer on wheels. And your comfort is directly dependent on the stability of the software. If there's a problem with the electric car's software, it's often cured with new firmware. This is a normal procedure, given the relative newness of the industry and the abundance of new manufacturers and models. Cell phone manufacturers do the same. In official electric cars, the update happens “on the fly”—the user receives a notification that it is necessary to update, choosing a convenient time. In Chinese cars for some models, you will have to search for firmware yourself on forums of car enthusiasts. Also, get ready to spend about $500 for firmware in the service (on average once a year).

High cost of spare parts. As far as cars from China are imported by “gray” import, you are deprived of the advantages of dealer service. The manufacturer does not keep in our country stocks of spare parts in warehouses and you will have to import everything yourself. 

Here is the approximate cost of body parts for one of the cheapest electric cars on the market—Honda M-NV:

Door — $1,000

Hood — 800$

Headlight— 500-600$

Fender — 400$

Cars brought in on “gray” imports may be disabled from updates by the manufacturer. Zeekr last year threatened to block the screens of electric cars imported from China after July 2024 that do not have a Chinese SIM card installed by the manufacturer. As of today, there are no known actual cases of blocking. But in a neighboring country, for example, Zeekr's mobile app, which could be used to remotely control the car, stopped working.

Conclusion

Owning an electric car from China is a kind of lottery. But you get an advanced high-tech product, and if you are prepared to put up with possible inconveniences, it is not a bad option for traveling to a bright future.