BYD's entry into Canada might spell relief for buyers looking for affordable electric vehicles, but it could also have dire consequences for incumbent automakers trying to get their EV efforts off the ground.
“An entrant like BYD coming into Canada could be devastating for the composition of our current industry,” Robert Karwel, director of customer success for J.D. Power Canada’s data and analytics division told Automotive News Canada.
The China-based company’s timeline for launching sales in Canada is unclear, but public documents filed with Ottawa in late July showed lobbyists acting on behalf of BYD have registered with the federal government to “advise on matters related to the expected market entry of BYD into Canada for the sale of passenger electric vehicles.”
The company did not respond to multiple requests for comment.
BYD now operates in more than 80 markets globally. Along with other China-based automakers, it has been winning market share in regions such as Europe, South America and China itself, at the expense of long-established competitors from North America, Europe and Japan.
'COLLATERAL DAMAGE'
Tu Le, managing director of Detroit-based Sino Auto Insights, likened the arrival of BYD and other China-based automakers in global markets to a “freight train that’s gaining momentum.”
“The European [and] the American carmakers in those regions are going to be the collateral damage.”
Those in Canada, he said, “should be scared shitless” as BYD prepares to roll in with a simple, low-cost product that “does what it’s supposed to.”
Fast-diminishing sales for a range of Western brands within China as the country’s homegrown EV market gains ground illustrate what’s next for global markets, he added.
Fear among incumbent auto brands in Canada is already evident, said Daniel Ross, senior manager of industry insights and residual value strategy at Canadian Black Book.
The Canadian industry’s recent push for tariffs on China-made EVs — that’s gained support from General Motors Canada, among others — shows Western automakers see the need to minimize the price gap between their own EVs and those made by China-based companies, Ross said.
AFFORDABLE EVS
How BYD would price its vehicles in Canada isn’t known, but global markets provide some indication.
Le said the BYD Atto 3, known as the Yuan Plus in China, is typically among the first models the company ships into new markets. In Europe, the compact crossover starts at 37,990 euro, roughly $57,000. The BYD Dolphin, a subcompact hatchback, starts in Europe at 33,990 euro, or $51,000.
The low-cost BYD Dolphin Mini, known as the Seagull in China, isn’t currently available in Europe, but has gone on sale in several other markets. In Brazil, it sells for the equivalent of about $28,500.
BYD recently applied to the Canadian Intellectual Property Office for Canadian trademarks for all three of these models, along with several others, including the BYD Shark, a mid-sized plug-in hybrid pickup the company plans to build in Mexico.
Before applying federal or provincial rebates, the cheapest EV currently available in Canada is the Fiat 500e, with a sticker price of $42,190, including delivery. A few other models at the low end of the market start at about $45,000, but most EVs retail today for more than $60,000.
With these high costs holding back EV adoption in Canada, Ross said BYD would “absolutely” find eager buyers if it can enter the market with an EV priced under $35,000.
Le, likewise, pointed to the company setting relatively low prices as vital to uptake.
“Most people aren’t going to spend $70,000 on a BYD, but they’d consider it for $30,000 [or] $35,000.”
But finding the right price point is just one of many challenges for BYD as it looks to carve out a place in the Canadian market.
Importing vehicles into Canada is much more involved than simply loading them on a ship or producing them down in Mexico, said Michael Robinet, executive director of automotive consulting with S&P Global Mobility.
DEALER NETWORK OR NOT?
“You need to set up an infrastructure. Even if you don’t have a dealer network and you go to an online model, you need to set up a service network, you have to establish a beachhead in the country to better understand the regulations.”
Given BYD’s expansion in recent years, none of this will be entirely new to the company, he added. It will have a gameplan for Canada, but the move isn’t for the “faint of heart.”
BYD should also benefit from studying the mixed successes and failures of other EV upstarts that have entered Canada over the past few years, Ross said. At the same time, the company will be well-advised to carry out its own homework on Canada’s unique challenges, he added, which are often overlooked by companies treating Canada and the United States as a uniform region.
Le said BYD’s approach to setting up shop has varied market to market. In Australia, for instance, the company sells through a local distributor, while in other markets it employs networks of local dealers. In numerous emerging markets, the company has ramped up extremely quickly, he added, becoming the top EV seller in a matter of months. In others such as Europe, it’s content to “play the long game” and build sales more slowly.
In all instances, however, the company has shown a “willingness and a determination to stick things out,” he added.
Industry sources have told Automotive News Canada that BYD has met with Canadian dealers about establishing local dealerships, but no further details are known.
NEW OPPORTUNITIES
Ross said that while a big new player entering the market may be a “scary thing” for incumbent automakers, for local dealers, it creates new opportunities to diversify and to get involved at the “foundation.”
“There’s opportunity for them to capitalize on never-before-seen, high-interest vehicles.”
Along with what are expected to be relatively cheap sticker prices, the interest in BYD stems from the good fit and finish of its products, Robinet said.
“They’re well executed. Anybody that thinks that they’re not, hasn’t seen one recently.”
But the company faces a mixed regulatory environment, Robinet said. On the one hand, it has momentum built off Ottawa’s effort to electrify Canada’s transportation sector, while on the other, possible tariffs could dramatically cut into its cost advantage over incumbent automakers, he added.
The Canadian government concluded 30 days of consultations on whether to impose a surtax on China-made EVs on Aug. 1. It has yet to say whether it will follow the United States and Europe in imposing tariffs.
— With files from Greg Layson
