How Chinese Electric Cars are Outpacing Western Brands

As Chinese electric vehicle (EV) manufacturers grow their presence in global markets, a recent teardown of various electric cars in Japan—including models from Tesla, BYD, Volkswagen, and Dacia—reveals why Chinese brands manage to keep costs low while maintaining performance.

This investigation underscores the production advantages of Chinese manufacturers and offers insights into how Western brands can compete.

Teardown Insights

In a study to understand Chinese EV cost-efficiency, Japanese automotive experts dismantled 15 EV models from Chinese, European, and American brands, examining 90,000 components.

They found that Chinese EV makers, along with Tesla, use fewer, more integrated parts—a strategy that reduces both production costs and complexity.

Key Cost-Saving Strategies

The findings highlighted three major strategies in Chinese EV production:

1. Integrated Production: Chinese brands like BYD keep costs down by producing critical components, such as batteries, in-house. This reduces dependency on third-party suppliers and allows for streamlined production.
2. Simplified Design: Chinese EVs use fewer parts, achieved by combining multiple functions into single components. Tesla also follows this approach, reducing manufacturing costs and increasing efficiency.
3. Standardized Parts: Chinese brands leverage part standardization across models, which keeps costs low while simplifying production.

Western Automakers’ Strategy

To stay competitive, Western automakers are adapting in three main ways:

• Vertical Integration: Brands like Renault and Stellantis are investing in battery production to reduce costs and dependence on external suppliers.
• Component Reduction: Simplifying vehicle designs by moving to purely electric platforms reduces the need for multiple parts.
• Platform Standardization: Western brands are beginning to standardize parts across models, as seen with Volkswagen’s MEB platform.

The Road Ahead

While Chinese brands push forward with fully electric models, Western manufacturers are recalibrating their EV strategies in response to changing market dynamics.

BYD, for example, has committed entirely to electrification by stopping combustion-only vehicle production in 2022.

The success of Chinese EV makers is tied to streamlined production, in-house capabilities, and cost-saving standardization. Western automakers, by embracing similar strategies can strengthen their competitive edge in the evolving EV landscape.