Budget Electric Wheel… Chinese EV makers rolled up with strong May delivery #s. BYD, which last year surpassed Tesla as the world’s largest EV seller, crushed it again with a third straight month of selling 300K+ EVs and plug-in hybrids. BYD’s Seagull electric hatchback, which retails for under $10K in China, is making waves because it offers premium features like wireless phone charging at a low price. BYD (stands for “Build Your Dreams”) is set to start selling the Seagull in Europe next year — which could be a nightmare for European carmakers.

· Smaller Chinese EV makers like Nio, XPeng, and Li Auto also grew deliveries in May. But last week Nio’s stock fell after it reported lower sales for the quarter.

· Musk’ling in: Tesla has a huge factory in China (its No.2 market) and is the largest EV seller in the country after BYD. Tesla’s China sales perked up in May but have trended down in the face of local competition.

All roads lead to Chinese cars… China’s vehicle exports quintupled during the pandemic, and last year it reported 5M shipments (China says it’s now the top car exporter; Japan disagrees). Chinese car brands like SAIC, Chery, and Dongfeng are hitting roads worldwide. Top buyers of Chinese models include Russia, Mexico, and countries in South America and the Middle East. China-made EVs registered in Europe surged 23% from January to April, and BYD’s eyeing a European expansion, despite EU plans to hike tariffs.

· Why you don’t see Chinese cars in the US: tariffs and politics. Last month President Biden announced he was quadrupling tariffs on Chinese EVs to over 100%. His admin said China’s “flooding global markets with artificially low-priced exports.”

· BYD said it doesn’t plan to sell in the US, but its Chinese rivals have signaled interest.

THE TAKEAWAY

Automakers don’t want to get cut off… The average cost of an EV in the US is ~$55K, and even with 100%+ tariffs and safety-standard modifications, budget Chinese models would still be more affordable. A US trade group said that if Chinese EVs did come to the States, it’d be an “extinction-level event” for domestic manufacturers. But protectionist moves by US lawmakers, combined with pro-“Made in America” sentiments, make that unlikely. Even if Chinese cars don’t flood the US, their growing prominence abroad should rattle carmakers.