The EV race heats up: BYD overtakes Tesla’s EV sales in last quarter of 2023

Read time: 6m 53s

What happened? 

Chinese car maker, BYD, has overtaken Tesla for the highest number of electric vehicle sales (EV) in the last quarter of 2023. 

BYD announced it had sold 525,000 battery-only vehicles, its highest number ever, whilst Tesla delivered a record of 484,500 EV’s. 

The Elon Musk owned company still managed to sell 1.8 million EV’s for the year as a whole, 230,000 more than BYD. 

More on the story 

Although BYD has sold less EV’s than Tesla in 2023, recent developments hint that the company is one step closer to unseating Tesla as the world’s top EV manufacturer. 

Susannah Streeter, head of money and markets at Hargreaves Lansdown stated, “As BYD has accelerated into the fast lane, it’s fresh evidence of just how competitive the EV market has become and how hard it will be for Tesla to swerve back to head the pack.” 

The EV market-both globally and in China-is very competitive. BYD is currently the largest EV manufacturer in China. I’ll delve more into this below. 

In January 2022, Elon Musk stated that Tesla had the potential to achieve two million deliveries in 2023. This expectation wasn’t met, however, the end of year performance was better than analysts has predicted, as sales increased by 20% for the same period in 2022. 

Dan Ives, an analyst of Wedbush Securities said the last quarter was a “clear win” for Tesla. 

BYD: A Quick Glance 

What? An EV battery and manufacturer 

Industry: the EV industry 

Founded: February 1995. They entered the automobile business in 2003 and launched its first PHEV in 2010 

Founder/s: Wang Chianfu 

Current CEO: Wang Chianfu 

Market Capitalisation: 611.56 billion (Hong Kong Dollars). This is roughly £78.2 billion in US dollars, at the time of writing.

What does BYD stand for? ‘Build Your Dreams’ 

Image courtesy of Stratstone

 

What factors have led to this?

  • BYD EV’s are generally more affordable than Tesla’s. BYD’s most popular model, the ‘Qin Plus’ retails for around two-thirds of the price of Tesla’s cheapest model in China. BYD’s Qin Plus sold nearly 400 more units than Tesla’s Model Y, in the six months ending in November. The numbers speak for themselves. When wanting to make a switch to an EV, a lower price point tens to appeal more to people than a higher one. Given the economic climate China is in, it’s no surprise that people have affordability even higher on their list of priorities when choosing to purchase a car.  

  • BYD is China’s top selling EV maker. China has a massive population of 1.4 billion. BYD has around 27% of the market share in the Chinese EV industry, whilst Tesla derives around 12% of its sales from the same market. For car makers that want to lead in the industry, cracking a nice chunk of the Chinese market share is important- and BYD is leading the way in this. 

  • Tesla has slashed its prices. Why? One reason came down to a slowing domestic economy in the US and as a strategic move to fend off competition, from its more affordable rivals. As I have previously stated, the lower the price point of a car, the more attractive it will be. Global car makers are also racing to electrify their vehicles- price slashes will encourage a greater number of people to switch to an EV. 

Image courtesy of Cnevpost

The Global EV market 

According to the International Energy Agency, 14% of all new cars sold in 2022, were electric. This figure was up from around 9% in 2021 and less than 5% in 2020. Over 2.3 million EV’s were sold in Q1 of 2023. The global EV market is projected to grow by around 16% by 2035, according to GlobalData. What is clear, is that the global EV market is growing-fast. 

China is the world’s biggest market when it comes to EV’s. Given its large population and cheaper price when it comes to affordability, it’s no surprise. Tesla leads in the Western world, but both companies want to expand. Tesla wants a greater share of the Chinese market, whilst BYD wants to expand across Europe. BYD have already taken the first steps in doing so- they plan to open a new manufacturing and production centre in Hungary. 

It’s a saturated market. If companies want to stay out on top, smaller companies will have to compete with bigger rivals in terms of production, battery, charging infrastructure and more.  

Image courtesy of Wallpapercave

Other leading companies include: 

  • General Motors (GM) 

  • Stellantis 

  • Volkswagen 

Image courtesy of The Motley Fool

The Chinese EV market:  

“No one can match BYD on price. Period” 

“Boardrooms in America, Europe, Korea and Japan are in a state of shock.“ These are words stated by Michael Dunne, CEO of Dunne Insights. 

The Chinese EV market is projected to grow by 5.59% between 2024 and 2028, resulting in a market volume of roughly $398 billion in 2028 

It has one of the fastest growing EV markets in the world, and has an estimated 500 EV makers within the industry. 

Image courtesy of Cnevpost

Leading Chinese EV markers include: 

  • BYD 

  • Li Auto 

  • Xpeng 

  • Zeekr 

The industry is becoming even more saturated and competitive. Chinese phone maker, Xiaomi, recently unveiled its first EV and its CEO, Lei Jun, stated it wants to become the “world’s top 5”. 

How has China managed to dominate this sector? 

  • Government policies. In 2023, the Chinese government announced a $72 billion tax break for EV’s and other green cars. This was in an attempt to boost slower auto sales growth in the country. It also came at a time of weakening economic growth for the world’s second largest economy. Property crisis, tension with the US and other nations are some of the reasons for their economic woe. 

  • Experimentation in similar industries. China began its EV push after the US. BYD, for example, began their EV production with electric buses. Experimentation allowed them to understand and provide solutions to building it. Such knowledge allowed them to innovate when it came to the production of the electric cars later. It allowed them to make the production of their batteries, which is a key component, even more efficient. 

  • Many companies focused on key technologies. In 2002, Chinese automakers predicted that battery cost would make up between 30-40% of the total manufacturing cost of a fully electric vehicle. This provided an opportunity of manufacturers to get ahead of the competition by focusing on a component that is central to EV’s. Furthermore, China accounted for 70% of global production of rare earth, an important component for battery production.   

Image courtesy of the Financial Times

China’s new EV sales accounted for nearly 60% of global EV purchases. It surpasses that of Norway and the US. 

Strengths and Weaknesses ‘:  

Producing cars is just one thing that BYD does. They also manufacture batteries (they began as a battery manufacturing company) and they deal with semi-conductors too. Their versatility in production has allowed them to cut costs by producing their batteries in-house. They’ve also been cushioned from supply chain shocks that its rivals (such as Tesla) have been going through. 

Tesla sources most of its batteries from outside suppliers, such as CATL (Chinese owned) and Panasonic. They’re battery making capabilities isn’t as strong as BYD. With that being said, Tesla plans to open a new factory in Hungary for $3.6 billion, which will, in part, produce car battery cells. This is good news for both Tesla and Hungary, as the country wants to position itself as a global hub for EV manufacturing and it means Tesla can begin the process of manufacturing more batteries in-house. 

Image courtesy of Essential Install

Tesla has a CEO that is juggling other successful businesses’ and isn’t afraid to speak his mind. His recent words have left some advertisers pausing or even entirely stopping adverts on X, formerly known as Twitter. His focus on his other ventures has caused some concern with investors in Tesla. For example in April 2023, Tesla shareholders alleged Musks’ lack of focus at Tesla, was causing problems for the company, such as a high turnover rate with its staff. 

If there is one thing Tesla should be praised on, its their charging infrastructure. Tesla have introduced their supercharges and since then, BP has made a $100 million order, EG Group has reached a deal to buy them as well. Could Tesla Superchargers become standardised, just as the QWERTY keyboard has? If so, it could be a game-changing move for the company, in terms of dominating different parts of the EV industry. It could cause Chinese auto-makers to become reliant on Tesla’s infrastructure, which I say, would be welcomed by the US company. Charging infrastructure is something that BYD wants too expand upon. 

Image courtesy of Driving Electric

Closing thoughts: 

BYD and Tesla are some of the stronger players within the EV industry. Their growth and expansion could cause smaller rivals to either shut down their business for good, reducing competiion. Or, it could cause their smaller rivals to merge together-which would provide a new soruce of heavier competition for the two EV companies. Do you think BYD and Tesla will form some sort of partnership? I don’t think this will happen. Although they have similar goals- to become a global leader in the EV industry, how they set about to achieve this and their motivations may differ. 

They both face bumps and humps on the road to EV domination. For example, many people still prefer to use cars relying on petrol or diesel. Some reasons for this include a lack of charging infrastructure, such as in the UK, high prices, which mean many can’t afford them, mileage- many EV’s cannot undertake long journeys and much more. However, since more and more people are switching to EV’s, it calls into question the sustainability of petrol cars. Will they be around in the next 100 years, for example? How will the global energy market be affected? 

I think Tesla and BYD will keep a close look on each other.  

Let’s see how things will pan out. 

What are your thoughts on the story? Is this an early sign that BYD will overtake Tesla for the most sold EV’s in 2024? Comment below, message me on any of my social media platforms or you can email me: hello@parahinsights.com 

Until next time, remember to stay curious! 

 

Further resources: 

‘China’s BYD surpasses Tesla as leading electric car seller’ - YouTube video by Al Jazeera English 

‘The Tesla Competitor Dominating China’s EV Market’- YouTube video by TWSJ 

DISCLAIMER:

This blog is for informational purposes only. Parah Insights is not associated with the news sources in this blog, and sharing does not equal endorsement. Parah Insights does not provide financial, tax, legal or accounting advice – always consult your financial and legal advisors to determine what’s right for you and your business.

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