LONDON, April 26 (Reuters) - U.S. and European

politicians have raised alarms that their domestic auto

industries could be destroyed by a wave of cheap Chinese

electric vehicles. But so far, China's top EV maker, BYD, has

dramatically hiked export prices compared to what it charges at

home rather than undercut foreign rivals.

The goal: to rake in hefty profit margins the automaker

can't get in China amid fierce competition.

In some foreign showrooms, BYD charges more than double -

sometimes nearly triple - the price it gets for three key models

in China, according to a Reuters review of the automaker's

pricing in five of its biggest export markets.

Take the BYD Atto 3, a compact electric crossover. In China,

the midrange version sells for $19,283. In Germany, the little

SUV is priced at $42,789 - a price that's still competitive with

comparable electric vehicles in that market.

BYD did not respond to a request for comment. Company

Chairman Wang Chuangfu in March told investors in a private

meeting that BYD expects exports to help shore up profitability

this year as a domestic price war weighs on its margins.

It's common for automakers to charge slightly different

prices for exports of the same or similar versions of a vehicle.

But the sheer size of BYD's upcharges for overseas markets is

rare, said Sam Fiorani, vice president of global forecasting at

market research firm AutoForecast Solutions.

"Globally marketed vehicles are usually priced in a narrow

range," Fiorani said.

The differential, in part, reflects cutthroat competition in

China, the world's largest auto market, where dozens of EV

brands are waging a price war. BYD's entry-level Seagull

electric hatchback sells for less than $10,000 at home.

BYD's big export markups also underscore the massive cost

advantages that China's EV industry has over foreign

competitors. China's EV leader has squeezed costs from every

stage of production, from raw materials to batteries, land and

labor, according to experts on China's auto industry and

battery-cost data provided to Reuters. In addition, Beijing has

heavily subsidized both domestic and foreign brands selling EVs

in China, where electric and plug-in hybrid vehicles accounted

for more than a third of all new car sales last year.

This cost edge has foreign competitors nervous. Some U.S.

and European automakers are calling for higher tariffs on

Chinese EVs. BYD and other Chinese EV makers are already

expanding in Europe but don't yet sell in the United States,

where they face higher tariffs and stiffer political resistance.

China's domination of the global EV industry is on display

this week at the Beijing International Automotive Exhibition,

where BYD showed off two luxury models as part of a strategy to

capture the premium market. Automakers are expected to launch

110 new EV and plug-in hybrid models in China this year, most

from Chinese brands.

Hiking export prices gives BYD room to generate much larger

profits per vehicle, experts in EV manufacturing costs told

Reuters. But those margins also give the automaker enormous

flexibility to cut prices if needed to grab market share abroad.

For now, Chinese automakers, led by BYD, are content to keep

export prices elevated and reap the profits, said Ben Townsend,

head of automotive at UK-based Thatcham Research, an

industry-funded firm that works on safety issues with

automakers, including some from China. He said Chinese EV makers

often struggle to break even or squeeze out a small profit in

their home market.

"They're not looking to undercut the European market," he

said. "They are looking to make margin."

BYD and other EV makers are also trying to shed the stigma

of cheap Chinese products as they build global reputations and

focus on maintaining strong resale values, said Bo Yu, Greater

China country manager for UK research firm JATO Dynamics.

"Chinese automakers are in a brand-development phase," she

said.

MASSIVE MARKUPS

Reuters reviewed pricing published by BYD or its dealers in

five of its leading export markets - Germany, Brazil, Israel,

Australia and Thailand - that commonly offered three of its most

popular electric vehicles, the Dolphin and Seal sedans, and the

Atto 3 SUV. In one case, Israel, the Seal was not offered.

Across those markets, the starting price for the BYD Atto 3

ranged from 81% to 174% higher than in China. Dolphin prices

ranged from 39% to 178% higher, and Seal prices from 30% to 136%

higher.

Comparing starting prices by market is complicated by

regional differences in available trim levels. In some cases,

entry-level exported vehicles examined by Reuters had slightly

better equipment than the lowest-priced model in China.

In cases where apples-to-apples comparisons were possible at

various trim levels, BYD's export prices typically were still

much higher than in China. For instance, the closest version of

the Dolphin on sale in Germany, with the same battery range,

sells for $37,439 - more than double the $16,524 price tag in

China. The upgraded Seal version sells for $48,139 in Germany,

59% more than its $30,317 China price.

By comparison, the Reuters analysis found that Tesla, which

has a higher cost base than Chinese rivals, sells its

Chinese-made Model 3 for only 37% more in Germany than in China,

according to Tesla's web site.

Automakers can face hefty costs in exporting cars. But BYD's

large export premiums are more than enough to cover them and

deliver thousands of dollars in additional profit per vehicle,

according to an analysis conducted for Reuters by A2MAC1, which

disassembles cars for automakers to assess their competitors'

products.

Based near Paris, A2MAC1 examined the European version of

the BYD Dolphin, which sells for about $35,000, and a China

version selling for about $15,000.

The European Dolphin is slightly longer and has extra

features, including a slightly bigger battery, a more

comfortable suspension and additional sensors. Still, accounting

for those upgrades, along with shipping and import taxes, A2MAC1

estimated that BYD's profit margin on the European car was about

$7,400 more than whatever it clears on the same car in China.

'BARGAINING POWER'

BYD has emerged as the dominant player in China's

electric-vehicle market. It's now investing heavily and growing

sales in markets worldwide.

Its 2023 exports of 240,000 cars accounted for 8% of its 3

million in global sales. But the automaker is swiftly adding new

models and new markets and says exports should jump to 400,000

cars this year.

The Reuters review of Chinese EV model prices in Europe

revealed that Chinese automakers often price their vehicles just

slightly below or above legacy European rivals, while stuffing

them with interior and tech features for which European

automakers charge extra. The top version of the BYD Atto 3 in

Germany sells for $42,789, just below the base model of the

electric Opel Mokka at $43,652, but above the $41,298 starting

price for a Peugeot E-2008.

Sometimes BYD shoots higher than competitors. It sells an

upgraded version of the Seal in Europe for 10% more than the

roughly comparable Tesla Model 3. In China, the Seal is priced

at 6% less than the Tesla.

BYD has an advantage over legacy automakers with its

vertically integrated supply chain. It makes almost all

components of its cars in-house rather than farming them out to

suppliers.

Lowering the cost of batteries - an EV's most expensive

component - has been key. BYD and other Chinese automakers and

suppliers have spent the last two decades securing access to

mines around the world to lock up critical battery minerals such

as lithium and cobalt, said Keith Norman, chief sustainability

officer at Silicon Valley battery startup Lyten. "They own the

critical-minerals part," Norman said.

Data provided to Reuters by market intelligence firm

Benchmark Mineral Intelligence, shows the price for batteries in

China to be around 18% lower this year than in Europe.

A giant company like BYD, which makes its own batteries, can

drive its costs even lower by negotiating volume discounts

across the battery supply chain, said Benchmark analyst Roman

Aubry.

Chinese automakers are helped by affordable land - often

subsidized by local authorities - and benefit from cheaper

electricity and labor. They can also build plants in China in as

little as a year because they face fewer regulatory hurdles than

in Western countries, according to Mark Wakefield, head of the

global automotive practice at AlixPartners, a New York-based

consultancy.

That means Chinese automakers' capital investment is far

lower per vehicle, "and you make more money," he said.