WESTERN automakers are set to lose a fifth of their global market share due to the unstoppable rise of more-affordable, cheaper-to-produce Chinese electric vehicles (EVs), according to UBS Group AG analysts.

Led by BYD Co., Chinese carmakers will almost double their share of the auto market to 33% by the end of the decade, UBS analysts, including Patrick Hummel and Paul Gong, wrote in an Aug. 31 report.

Chinese manufacturers, including Nio Inc. and Xpeng Inc., have ramped up their presence at this week’s IAA car show in Munich, and while German powerhouses Mercedes-Benz Group AG and BMW AG unveiled their next generation EVs, they won’t hit the market until 2025.

“The global auto industry is going to undergo seismic changes over the next 10 years or so,” Gong, UBS’s head of China autos research, said.

The report predicted Western automakers’ global market share will slump to 58% from 81% by 2030.

“That would be a crisis moment for Western legacy companies,” Gong said.

Tesla Inc.’s share is likely to rise to 8% from 2%.

BYD, China’s biggest-selling auto brand, has a 25% cost advantage over North American and European brands, giving the Shenzhen-based company ample firepower to undercut rivals on their home turf as it expands globally.

A UBS teardown of a 2022 BYD Seal sedan found 75% of the components were manufactured in-house. The figure, double the global average, is the secret to BYD’s cost-advantage in its quest to control its own fully integrated supply chain. The Seal is almost wholly made in China, with around 10% or less of parts from foreign suppliers, UBS estimates.

“It’s really a showcase of Chinese engineers and engineering dividends,” said Gong, pointing to BYD’s 600,000-strong workforce — five times larger than Tesla’s — including 90,000 engineers.

BYD, which also makes its own batteries and semiconductors, has a 15% cost advantage over Tesla’s Chinese-made base Model 3 sedan, and a more than 30% advantage over Volkswagen AG’s ID.3, according to the UBS report.

BYD dethroned Volkswagen as China’s top-selling car brand earlier in 2023.        (SD-Agencies)