6 Reasons Why Chinese Cars and EVs are So Cheap (+Cheap Chinese Cars)

You shouldn’t be amazed when you see the news of the cheapest electric car coming out of China at $1,249. Yeah, you read that right. That’s the starting price of Changli Nemica. One can say that  Changli is a brand known for producing small, gimmicky, and cheap electric cars.

But in general, also Chinese cars are 50% cheaper than cars from other countries. Similarly, when it comes to electric cars from China, Chinese EVs are up to 53% cheaper than EVs from other countries. Why is that? How come China is producing some of the cheapest cars in the world?

In this blog post, we’ll inspect and analyze the reasons why Chinese cars and EVs are so cheap. So, without any further ado, let’s get started!

6 Reasons Why Chinese EVs and Cars are Cheaper

Let’s overview the reasons why Chinese cars and EVs are cheaper than other countries.

1. Government Policies and Regulations

China is an export-based economy. In 2023, the country exported over 5 million cars, making it the biggest exporter of automobiles in the world. Since auto exports represent a significant portion of China’s GDP, the government is highly focused on providing subsidies and incentives to local auto manufacturers. These incentives have driven down costs significantly.

Similarly, the Chinese government has invested heavily in the EV sector. Since 2009, over $29 billion has been allocated to support the production of electric vehicles. Also, a 520 billion yuan ($71.8 billion) package of sales tax breaks was introduced to promote EV sales. With all these factors combined, Chinese automakers are able to produce the cheapest electric cars in the world.

2. Low Labor Costs

Labor costs in China are considerably lower than in many Western countries. For instance, hourly wages for assembly line workers in China start from $4.20. In contrast, American auto workers earn around $29 per hour on average. This substantial difference in labor costs allows Chinese manufacturers to keep production costs low.

While Chinese labor has historically been cheap, wages have been rising significantly, tripling over the past decade. Despite this upward trend in wages, China’s labor costs are still lower than those in several emerging markets and developed nations.

3. Low Material Costs

In addition to labor, the cost of materials used in manufacturing vehicles is generally lower in China due to local sourcing in raw material procurement. China is a major producer of metals and minerals used in vehicle production, which reduces reliance on imports and lowers material costs.

This advantage is particularly pronounced in the EV sector, where battery manufacturing relies on materials that China produces in abundance. For example, battery prices in China are 24% lower than in the U.S., contributing to the overall affordability of Chinese EVs.

4. Economies of Scale

China’s position as the world’s largest automobile market enables manufacturers to achieve economies of scale. As of 2024, China leads in both vehicle sales and production, with domestic output projected to reach 35 million vehicles by 2025. This immense scale allows manufacturers to produce vehicles in large quantities.

Economies of scale enable Chinese automakers to spread fixed costs, such as R&D and factory overheads, over a greater number of units. Consequently, this reduces the average cost per vehicle, making it financially advantageous for companies to operate in this market.

5. Supply Chain Advantages

Chinese car manufacturers benefit from highly localized supply chains that reduce logistics and transportation costs. One significant advantage that Chinese manufacturers have is their access to a vast network of local suppliers. The proximity of suppliers allows for quicker turnaround times and lower shipping expenses, which are critical for maintaining low overall production costs.

By sourcing materials locally, manufacturers can reduce transportation costs and minimize delays associated with importing raw materials from overseas. This localized supply chain allows manufacturers to negotiate better prices with suppliers. As a result, Chinese automakers can produce vehicles at a lower price point while maintaining acceptable quality standards.

6. Technology Innovations and Investments

Chinese EV companies are at the forefront of technological innovation. They are reportedly 30% faster than traditional automakers in developing new models, allowing them to respond quickly to market demands and consumer preferences.

Moreover, Chinese automakers have made substantial investments in the automotive technology. Now, this doesn’t seem like a cost-effective option in the short term, but in the long term, it has helped bring the cost of auto manufacturing down in China.

Similarly, the vast size of the Chinese market not only supports local manufacturers but also attracts substantial foreign investment. The influx of capital and technology fosters an environment where manufacturers can further optimize their production processes and reduce costs.

Cheap Chinese Cars for Import

Here are the cheapest conventional cars you can import from China today, under $10,000.

Cheap Chinese Electric Cars for Import

Here are the cheapest electric cars you can import today from China for under $8,000.

Final Word: Why Chinese Cars are So Cheap?

In conclusion, Chinese cars are cheap due to the government incentives and supportive regulations on automotive manufacturing. Moreover, the low costs of labor and materials, in conjunction with economies of scale, play an important role in making Chinese cars cheap.

Are you looking for a cheap Chinese car or EV? You can import one from China. GuangcaiAuto brings you a variety of reliable and cheap cars and electric vehicles from China.

We offer cheap cars from 60+ worldwide auto brands. With our efficient shipping and streamlined import process, bringing your dream car to your doorstep is easier than ever.

Get in touch with our sales team for more information, and don’t forget to explore our blog for the latest news and offers from the Chinese car market.