Chinese electric car manufacturers are becoming increasingly competitive with European and Japanese brands, and lower prices are one of their biggest advantages.
To find out why BYD can produce vehicles at lower costs, Japanese experts dismantled and analyzed its electric Atto 3 model.
According to the analysis, the Chinese manufacturer’s advantage is not only lower labor costs. Producing important components in-house and combining several systems into one unit also play a big role, making vehicle assembly simpler and cheaper.
Producing important components in-house
Traditional car manufacturers purchase a large number of components from outside suppliers. Electronics, batteries, mechanical parts and interior equipment can come from different companies, each adding its own profit margin to the price.
BYD develops and manufactures many important components within the company. This gives it greater control over costs and production schedules, while also allowing faster adjustments.
Batteries are particularly important because they are among the most expensive components of an electric vehicle.
BYD produces its own batteries, reducing dependence on outside suppliers and changes in the supply chain.
This approach also lowers some transportation and logistics costs because fewer parts need to be delivered from different suppliers.
Fewer parts and simpler assembly
While dismantling the Atto 3, Japanese experts also noticed that BYD combines several important systems into a single drive unit.
This reduces the number of separate components and simplifies the vehicle’s construction.
Having fewer parts also means fewer steps during assembly, which helps reduce production costs.
Developing and manufacturing components within the same company also allows BYD to make decisions faster and adjust its production lines more easily.
A challenge for other car manufacturers
The analysis of the Atto 3 shows that the price competitiveness of electric vehicles depends not only on labor costs but also on how cars are designed and manufactured.
For Japanese and European brands, this represents another challenge.
Along with vehicle quality and reliability, simpler construction, more efficient assembly and control over the production of expensive components are becoming increasingly important in the automotive industry