Theo Leggett writes an interesting piece here for the BBC about the rise of the Chinese electric car, encapsulated in this week's launch of BYD's Dolphin Surf. At £18,000 it is cheap for an electric car and represents a threat to European manufacturers.

The article is interesting in highlighting the size of the Chinese market and the factors that are giving China a competitive advantage in the sector - notably economies of scale and government assistance - and some are concerned about the prospects for Europe's car manufacturers. That said, the Renault E5 is seen as potentially being able to compete, although it's debatable whether this competition is always fair, and then there's the ongoing concerns about security, with fears that Chinese electric vehicles can monitor consumer behaviour.

Why are Chinese EVs typically much cheaper?

Chinese electric vehicles (EVs) are typically cheaper than those manufactured in countries like the USA due to a combination of economic scale, supply chain advantages, and state support. First, China is the world’s largest EV market, which allows manufacturers like BYD and NIO to benefit from economies of scale — the cost per unit falls as production volumes rise. With high domestic demand and vast production capacity, Chinese firms can spread fixed costs over millions of vehicles, keeping prices low.

Secondly, China has built a highly integrated supply chain for EV components, particularly batteries, which are the most expensive part of an electric vehicle. Companies such as CATL and BYD produce batteries domestically and at scale, reducing reliance on costly imports and lowering production costs. In contrast, U.S. automakers often face higher input costs due to fragmented supply chains and reliance on foreign suppliers.

Additionally, the Chinese government has played a central role through generous subsidies, tax breaks, and policy incentives for both manufacturers and consumers. These policies have helped domestic firms ramp up production and invest in innovation without bearing the full financial burden. In contrast, U.S. EV manufacturers operate in a more market-driven environment with less consistent policy support.

Together, these factors allow Chinese EVs to be priced more competitively in global markets, raising concerns among Western automakers about fair competition and long-term viability.