BYD cuts the price of its cheapest car by 22%

From the newsletter

The Seagull, BYD’s cheapest electric car, is now selling for $7,800 in China after the automaker slashed its price by 22% from $10,000. While the car currently sells in African countries for up to four times the price in China, the momentum is clearly downwards. BYD has also cut the price of 21 other models by up to 34%, setting off a global price war.

• It remains to be seen how soon the price cut will significantly drive down the prices of electric cars in frontier markets such as Africa where purchasing power is low. But it’s likely to come.

• The overall decline is expected to continue beyond this year, mainly due to lower battery costs. Battery prices dropped 20% in 2024, and the trend is expected to run further.

More details

• While BYD’s price cut is temporary – it is part of a promotional campaign running through June – it signals that the company is determined to win the global EV race at any cost. BYD’s lower pricing has made it the world’s largest seller of new energy vehicles (including hybrids), and only behind Tesla when it comes to pure EVs. 

• BYD has significantly expanded its presence in Africa in recent years and is now in more than a dozen countries. The company has launched in Egypt, Benin, Ethiopia, Kenya, Madagascar, Nigeria, Rwanda and Morocco. Others are Senegal, Seychelles, South Africa, Zambia and Zimbabwe, with potential expansion into other markets within the continent.

• To create a picture of how the Seagull, known outside of China as the Dolphin Mini, might fare in Africa, let us use the example of the BYD Sealion 7. While the vehicle costs an estimated $26,000 in China, it costs about $105,000 in Kenya and $72,000 in South Africa, some of Africa’s leading EV markets. These major price differences are caused by shipping costs, taxes and margins charged by dealers.

• The Seagull is yet to be introduced in most African countries. The main models that BYD has brought to the continent are the Atto 3, Dolphin and Seal. The Seagull is however expected to be introduced in some markets in Africa this year, particularly South Africa. As shown in the example above, it means the Seagull could sell in South Africa for a price of about $22,000 and $32,000 in Kenya when introduced.

• China produces 70% of the world’s EVs, which means as prices there plummet, it will have a direct impact on the global prices of EVs. The Asian giant is also the primary source of Africa’s EVs, with the continent importing more than 19,000 electric cars from China in 2024. This is expected to grow further in 2025 as demand for EVs, boosted by lower prices, increases.

• The potential downside of cheaper EVs from China is that they could make local manufacturing by African countries economically unviable. Countries that are trying to make their own electric cars such as Egypt are already facing pricing pressure from imports, and their operations cannot be sustained without heavy government subsidies and import restrictions.  

Our take

• The price cut will reduce BYD’s vehicle margin in the short term. However, the company will likely offset the impact via larger sales scale and battery cost staying low while it will also enable it to expand its presence in more markets, especially in Africa. 

• The proliferation of used EVs will help drive down prices faster. More than 90% of vehicles sold in Africa are second-hand because they are cheaper. EVs currently have faster depreciation rates than fuel vehicles, which will make used EVs more accessible to buyers.

• The BYD Seagull could be an ideal option for use as a taxi vehicle in Africa, particularly in crowded urban areas, due to its compact size, efficiency, and budget-friendly price. Its small size and maneuverability make it ideal for navigating crowded city streets and tight parking spots.