Can old-fashioned import duties put the brakes on now that China’s BYD is flooding Europe with cheap electric cars?

A giant Chinese cargo ship lumbers along the west coast of Africa before making its way around the Cape of Good Hope. The ‘BYD Explorer 1’ returns from a potentially groundbreaking trade mission: to flood Europe with cheaper electric cars and dethrone Tesla.

The 200-metre-long ship is two weeks into its return journey from its maiden voyage and has dropped off more than 5,000 vehicles at ports in the Netherlands, Germany and Belgium.

The final destination is Shenzhen in Southeast China, from where it left more than two months ago.

This bustling city near Hong Kong is home to ship owner BYD. This is a company so big that it built its own walled city, complete with an airport-style monorail for its employees.

The brand – which stands for Build Your Dreams – is backed by legendary American investor Warren Buffet and is the largest car manufacturer that most Westerners have never heard of.

But that’s going to change. BYD recently pushed Elon Musk’s Tesla to become the world’s top-selling electric car maker in the final three months of last year.

Some are calling BYD the “Tesla Killer” after it emerged victorious in a brutal price war in China, a country that builds and buys more electric cars than the rest of the world combined. BYD doesn’t seem to be stopping.

However, old-fashioned protectionism could put on the brakes. Despite ambitious environmental targets to ban the sale of new petrol and diesel cars in just over a decade, Britain’s Trade Secretary Mark Harper said last week that Britain could use “robust” trade sanctions to prevent China from market flooded with cheap electric vehicles.

And the post-Brexit trade watchdog, the Trade Remedies Authority, has also indicated it is prepared to launch an investigation into Chinese electric vehicles.

Lawmakers in Europe and the US are wary of the prospect of their citizens buying cheaper electric cars subsidized by the People’s Republic of China.

BYD received a total of £2 billion in subsidies from the communist government in Beijing between 2008 and 2022, the company said in its annual reports.

European Commission President Ursula von der Leyen complained in September that this made the price of his cars “artificially low”.

However, the company presses on and the Explorer 1 marks the next logical phase in its quest for world domination.

Of the three million cars BYD sold last year, only 243,000 were exported.

The slowdown in global electric car sales, including in China, has given BYD more urgency to expand abroad.

That’s why the company has commissioned another seven freighters, each capable of carrying up to 7,000 electric cars, to hit the high seas over the next two years.

It has set up assembly lines in Brazil, Hungary, Thailand and Uzbekistan. More factories are planned in Indonesia and Mexico, which BYD sees as a backdoor into the US market. BYD has a knack for making well-designed vehicles cheaper than its rivals.

The company recently announced the launch of its cheapest car yet in China: a supermini called the Seagull Honor Edition, which costs the equivalent of less than £8,000.

Last year it launched its first model in Britain, the Atto 3 SUV, which starts at around £36,000, around £9,000 less than Tesla’s equivalent, the Model Y – the best-selling new car in Europe last year.

BYD’s all-electric Yangwang U9 Supercar, with its signature scissor doors, was launched in three weeks to rival Ferrari and Lamborghini. However, about half of BYD’s sales are popular plug-in hybrids, giving BYD an edge over Tesla as global demand for electric cars has declined.

The company was founded in 1995 by Wang Chuanfu – a chemist who came from a poor farming family – when he was just 29.

Now known as ‘the Chairman’, he made his initial fortune manufacturing mobile phone batteries and other components for Siemens, Nokia and Motorola, before moving into car building after opening an assembly plant in Xi’an in 2003. , central China.

BYD’s potential was spotted by Warren Buffett’s right-hand man, the late Charlie Munger, in 2008, several years before the company launched its first electric car.

Buffett’s investment vehicle Berkshire Hathaway bought a 10 percent stake for £181 million.

The stake, which has been reduced to around 8 percent, is now worth £5.1 billion.

Wang scored another major coup in 2016 by poaching Wolfgang Egger, a prominent German car designer who had worked for Alfa Romeo, Audi and Lamborghini.

BYD’s cars, which until then had a reputation for being unattractive, were given a sleek makeover.

A few years later, Wang made a technological breakthrough with the launch of cheaper and more efficient ‘Blade’ batteries in 2020, used by Tesla and Toyota in some of their models.

This contributed to turbocharged growth at BYD, which has a stranglehold on the EV battery supply chain, controlling everything from stakes in lithium mines to the battery packs themselves.

It reached a major milestone in the final three months of last year, when it sold 526,409 fully electric vehicles, compared to 484,507 sold by Tesla (although the US company still sold more during the year). BYD’s meteoric rise has shocked more established automakers around the world. They have called for tougher trade barriers to stop China’s major invasion of electric cars.

Musk, who in 2011 ridiculed the appearance of BYD cars when he dismissed them as not a threat, has changed his tune. In an earnings call with investors in January, he warned that Chinese auto exporters would “demolish virtually most other companies in the world” unless new trade tariffs are imposed quickly.

Backlash from Western governments is the biggest threat to BYD’s rise.

Higher tariffs are on the horizon as the EU launches an investigation into whether not only BYD, but also other Chinese carmakers such as Geely – owner of Volvo – and SAIC, owner of MG, benefit from ‘hidden’ government subsidies, including cheap loans and supplies of steel and electricity.

Tariffs of 27.5 percent on imports of Chinese electric cars imposed by the Trump administration have helped push BYD out of the US market.

Earlier this month, US President Joe Biden took further steps toward blocking imports of Chinese electric vehicles, warning that internet-connected cars and trucks pose national security risks.

But as things stand, BYD is still in pole position to overtake its rivals.