Governments in the US and the Europe Union claim that China is subsidizing the production of battery electric vehicles (BEVs) to the point that there is no production excess capacity, leading to ‘dumping’ of Chinese BEVs in export markets. There is some truth in that claim, but like many complex subjects, a bit more nuances is required to give an honest answer.

Despite accusations of dumping cheap BEVs overseas, world No.1 BEV and PHEV manufacturer BYD is selling its cars in export markets at far higher prices than China. This is even after factoring for differences in BEV subsidies between China and Europe.

A comparison by Reuters found that a BYD Atto 3 is sold in Germany at more than twice the price in China (USD 40,649 vs USD 19,282), with comparable features.

In some cases, BYD’s models are priced higher than equivalent competitor models. The BYD Seal for example, is 10 percent more expensive in Europe than a similarly equipped China-made Tesla Model 3, with identical incentives.

Tesla has a higher cost than BYD, yet the BYD is the one with a higher sticker price, suggesting that BYD’s profit margin on the Seal is very high.

Contrary to claims that BYD is undercutting its Western rivals by pushing subsidized production cost BEVs to the West, UK-based Thatcham Research’s Head of Automotive Ben Townsend told Reuters, "They're not looking to undercut the European market,” he said. “They are looking to make margin."

Reuters compared prices of the BYD Atto 3, BYD Dolphin, and BYD Seal – the brand’s three most popular BEV models overseas – in five of its main export markets: Thailand, Australia, Israel, Brazil, Germany.

They concluded that export versions of the Atto 3 are between 81% to 174% more expensive than in China, Dolphin at between 39% to 178%, while the Seal is 30% to 136% more expensive.

The reason is quite simple. The cut-throat price war in China is forcing BYD to cut its profit margins, and the company is looking at export markets to make up for the shortfall in profits.

Tesla, which also exports from China, is adopting the same method to pad its financial numbers. Reuters says a China-made Tesla Model 3 is 37% more expensive in Germany than in China.

Far from dumping money-losing BEVs into the West to gain market share, BYD is profiting massively from its export markets.

China has multiple layers of subsidies to boost demand for battery EVs and PHEVs (both (collectively grouped under Chinese policies as NEVs or New Energy Vehicles), some a bit opaquer than others.

Different provincial governments offer different levels of subsidies to consumers buying NEVs. Manufacturers also enjoy much cheaper subsidized electricity and land acquisition costs. Some local governments will also purchase renewable energy from the manufacturer at higher prices.

However, unlike other countries, China treats BEVs the same as PHEVs. The latter also include EREVs, or extended range electric vehicles. EREVs are PHEVs with engines that are used solely as a generator.

Malaysia exempts imported BEVs from import and excise tax, but this benefit also comes with a minimum RM 100,000 floor price. The exemption expires on 31-December 2025 (assuming no further extension is announced).

There are expectations that prices will fall when this floor price is removed, but as you can see from the above, it is in BYD's interest to keep prices high outside of China. To maintain its market share in China, BYD needs overseas buyers to fund its costly price war back home.

This is not say that prices won't come down, especially with the recent RM 8k price cut by the Tesla Model 3, but predicting future price movements in the volatile BEV market is extremely difficult.

If there's a BYD model that you fancy, and you don't mind paying more to have the newest and the best, just go ahead and buy what you like. But if you are the type who is very concerned about resale value, then BEVs are not for you, at least not now.

The BYD Dolphin is currently priced from RM 100,530 (on-the-road excluding insurance).