Now China's ultra-cheap EVs are scaring China

China's ability to make electric vehicles (EVs) cheaply has caused angst in countries with big carmakers, prompting governments to investigate China's subsidies for the sector and to erect trade barriers.

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Now, though, it is China's own government that is worrying about how cheap its producers' EVs are. The race to the bottom shows no sign of letting up, and the industry has become emblematic of some of the broader problems facing the economy.

On May 23rd China's biggest EV manufacturer, BYD, caused shockwaves when it slashed the cost of 22 electric and hybrid models. Now the starting price of its cheapest model, the Seagull, has fallen to a mere 55,800 yuan ($7,700). The move came just two years after BYD had originally unveiled the electric hatchback, at a then astonishingly low cost of 73,800 yuan.

The latest move triggered official concern about how low prices could go in the world's largest car market. On May 31st China's industry ministry told Xinhua, the state-run news agency, that "there are no winners in the price war, let alone a future." The ministry vowed to curb cut-throat competition, which it said harmed investment in R&D, and could cause safety problems. On June 1st People's Daily, the Communist Party mouthpiece, argued that low-priced, low-quality products could harm the reputation of "made-inChina" goods.