Why the EU might be about to make Chinese electric cars more expensive

Theo LeggettBBC international business correspondent

With China accused of selling electric cars at artificially low prices, the European Union is widely expected to hit them with tariffs this week.

The BYD Seagull is a tiny, cheap, neatly styled electric vehicle (EV). An urban runabout that won’t break any speed records, but nor will it break the bank.

In China, it has a starting price of 69,800 yuan ($9,600; £7,500). If it comes to Europe, it is expected to cost at least double that figure due to safety regulations. But that would still be, by electric car standards, very cheap.

For European manufacturers that is a worrying prospect. They fear the little Seagull will become an invasive species, one of a number of Chinese-built models poised to colonise their own markets at the expense of indigenous vehicles.

China’s domestic auto industry has grown rapidly over the past two decades. Its development, along with that of the battery sector, was a major component of the “Made In China 2025” strategy, a 10-year industrial policy launched by the Communist Party in Beijing in 2015.

The result has been the breakneck development of companies like BYD, now vying with Tesla for the title of the world’s biggest manufacturer of electric vehicles. Established giants such as SAIC, the owner of the MG brand, and Volvo’s owner Geely, have also become big players in the EV market.

Last year, more than eight million electric vehicles , externalwere sold in China – about 60% of the global total, according to the International Energy Agency’s annual Global EV Outlook.

For policymakers in Europe and the US, however, this is a cause for concern. With Chinese brands having plenty of surplus capacity and moving into international markets, they fear their own companies will be unable to compete. They claim hefty subsidies for domestic production allow Chinese firms to keep prices at a level other firms will struggle to match.

According to a report by the Swiss bank UBS, published in September, the Chinese advantage is real. It suggested that BYD could produce cars at some 25% lower cost, external than the best of the legacy global carmakers.

It said BYD and other Chinese firms were “set to