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Small, well-built Chinese EV, Seagull, threatens the US auto industry

A small, cheap electric car called the Seagull is shaking American automakers and politicians.

The car, launched last year by Chinese automaker BYD, sells for about $12,000 in China but drives well and is put together with craftsmanship that rivals American-made electric vehicles costing three times as much. A shorter range version costs less than $10,000.

Tariffs on imported Chinese vehicles will likely keep the Seagull away from American shores for a while, and if it were imported it would likely sell for more than $12,000.

But the rapid rise of low-priced electric cars from China could shake up the global auto industry in ways not seen since Japanese manufacturers burst onto the scene during the oil crises of the 1970s. BYD, which stands for “Build Your Dreams,” could be a nightmare for the American auto industry.

“Any car company that doesn’t pay attention to them as a competitor will be lost when they enter their market,” said Sam Fiorani, vice president at AutoForecast Solutions near Philadelphia. “BYD’s entry into the US market is not an ‘if’. It’s a ‘when’.”

American politicians and manufacturers already see Chinese electric cars as a serious threat. The Biden administration is expected to announce 100 percent tariffs on electric vehicles imported from China on Tuesday, saying they threaten American jobs and national security.

The Alliance for American Manufacturing says in an article that government-subsidized Chinese electric cars “could ultimately become an extinction-level event for the U.S. auto sector.”

Earlier this year, Tesla CEO Elon Musk told industry analysts that Chinese electric cars are so good that without trade barriers they will “pretty much destroy most of the other car companies in the world.”

Outside China, electric vehicles are often pricey, aimed at a niche market with higher incomes. But Chinese brands that aren’t yet global household names are offering affordable options that will appeal to the masses — just as U.S., European and many other governments are encouraging a shift away from gasoline vehicles to combat climate change.

“Western markets have not democratized electric cars. They have gentrified electric cars,” said Bill Russo, the founder of the consulting firm Automobility Ltd. in Shanghai. “And when you gentrify, you limit the size of the market. China is all about democratizing electric cars, and that is what will ultimately lead to Chinese companies being successful as they go global.”

In a huge garage in an industrial area west of Detroit, a company called Caresoft Global has taken apart and reassembled a bright green Seagull that the Chinese office had purchased and shipped to the US.

Company Chairman Terry Woychowski, a former chief engineer of General Motors’ full-size pickup trucks, said the car is a “tone-son” for the U.S. auto industry, which is years behind China in designing low-cost electric cars.

After the teardown, Woychowski, who has been in the auto business for 45 years, said he wondered whether American automakers can adapt. “Things are going to have to change in some radical ways to compete,” he said.

There is no miracle that explains how BYD can produce the Seagull for so little money. Instead, Woychowski said the entire car, which can travel 250 miles per charge, is “an exercise in efficiency.”

Higher labor costs in the US are part of the equation. BYD can keep costs low because of its expertise in making batteries – largely for consumer products – that use lithium iron phosphate chemistry. They cost less but have a shorter range than most current lithium-ion batteries.

Americans are still learning how to make cheaper batteries, Woychowski said. Ford is building a lithium iron phosphate battery factory using technology from China’s CATL.

BYD makes many of its own parts, including electric motors, dashboards, bodies and even headlights. It also has the advantage of its enormous scale: last year three million vehicles were sold worldwide.

“Having all of that integrated internally and vertically gives them an incredible advantage,” Woychowski said.

BYD designs all aspects of its vehicles with cost and efficiency in mind. For example, the Seagull has only one wiper, eliminating the need for one motor and one arm, saving weight, cost and labor on installation.

U.S. automakers don’t often design vehicles this way and therefore incur excessive engineering costs, Woychowski said. For example, hoses must meet long-standing requirements in internal combustion engines for strength and the ability to carry fluid at high pressure, many of which are not needed for electric vehicles, he added.

The weight savings add up, allowing the Seagull to travel further per charge on a smaller battery. For example, the Seagull that Caresoft tested weighs 2,734 pounds (1,240 kilograms), about 900 pounds less than a Chevrolet Bolt, a slightly larger electric vehicle made by GM.

So Detroit has to quickly relearn a lot of design and engineering to keep up and shed the practices of a century of building cars. The trick will be determining which procedures to maintain for safety and quality, and which to jettison because they are unnecessary, he said.

“You’re going to have to be extremely serious about this, and you better leave your paradigms at the door,” Woychowski said. “Because you’re going to have to do things differently.”

Even with its minimalist design, the Seagull still has a quality feel. The doors close firmly. The gray leatherette seats have stitching that matches the body color, a feature usually found in more expensive cars. The Seagull “Flying Edition” tested by Caresoft has six airbags, rear disc brakes and electronic stability control.

A quick drive through some connected parking lots by a reporter showed that the car runs quietly and can handle corners and bumps as well as more expensive electric vehicles.

While the acceleration isn’t mind-blowing like other EVs, the Seagull is peppy and should have no problem getting onto a highway in heavy traffic. Woychowski says top speed is limited to 80 miles per hour.

BYD would have to modify its cars to meet US safety standards, which are stricter than in China. Woychowski says Caresoft hasn’t done any crash testing, but he estimated it would add $2,000 to the cost of the Seagull.

BYD sells the Seagull, renamed Dolphin Mini in some overseas markets, in four Latin American countries for about $21,000, twice as much as domestically. The higher price includes transportation costs, but also reflects the higher profits possible in less cutthroat markets than China.

In Europe, BYD offers larger models such as the Seal, which starts at 46,990 euros ($50,000), in France.

According to the China Passenger Car Association, the Chinese manufacturer’s two main overseas markets were Thailand and Brazil in the first two months of this year.

BYD builds electric buses in California and told the AP last year that it is “still in the process” of deciding whether to sell cars in the US. It is weighing locations for a factory in Mexico, but that would be for the Mexican market, two company executives said in media interviews earlier this year.

The company does not sell cars in the US, largely due to 27.5 percent tariffs on the retail price of Chinese vehicles when they arrive at ports. Donald Trump imposed the largest share of the tariff, 25 percent, when he was president, and it was maintained under Joe Biden.

Trump claims the rise of electric vehicles, backed by Biden, will cost American factory jobs, sending work to China.

The Biden administration has supported legislation and policies to build an American EV manufacturing base, and it has not ruled out further tariffs to keep the Chinese out. The government is also investigating cars made in China that could collect sensitive information.

Some members of Congress are urging Biden to ban imports of Chinese vehicles, while others have proposed even higher tariffs. This includes vehicles made in Mexico by Chinese companies, which are now coming in largely without tariffs.

Ford CEO Jim Farley has seen Caresoft’s work on the Seagull and BYD’s rapid growth around the world, especially in Europe, where he previously led Ford’s operations. He is moving to change companies. A small “skunkworks” team is designing a new small electric car from the ground up to keep costs low and quality high, he told analysts earlier this year.

Chinese makers, Farley said, sold almost no electric vehicles in Europe two years ago, but now they have 10 percent of the electric vehicle market. It is likely that they will export around the world and possibly sell in the US

Ford is preparing to counter that. “Don’t take anything for granted,” Farley said. “Not this CEO.”

By TOM KRISHER and KEN MORISUGU Associated Press

Associated Press writers Paul Wiseman and Didi Tang in Washington contributed to this report. Moritsugu reported from Beijing.