We are witnessing a turning point: the long-underestimated Chinese car and battery manufacturer BYD sold more electric cars worldwide than Elon Musk’s Tesla for the first time in the past three months. The electric car pioneer also achieved impressive growth, but even Tesla cannot keep up with BYD.
At the beginning of 2021, Tesla sold five times more electric cars than BYD, and just three years later the Chinese overtook them, as this chart shows.
To achieve this rapid growth, both manufacturers had to significantly reduce their prices last year. Both can afford price cuts, but they have boosted sales at BYD much more than Tesla.
Musk: “Have you seen their cars?”
Musk once mocked the Chinese competitor. “Have you seen their cars?” the Tesla CEO asked in a 2011 interview with Bloomberg TV, laughing evilly. BYD is not a competitor of Tesla “and their technology is not particularly strong,” Musk said.
But that was a long time ago and now it sounds very different: “Today they are very competitive,” Musk said in May 2023 about Tesla, which has now become his strongest rival. It was probably already clear to him that the Chinese market leader would sooner or later overtake Tesla worldwide.
In 2011, Elon Musk scoffed at the idea of BYD competing with Tesla in a Bloomberg TV interview.
Now, in 2023, the Chinese carmaker will become number 1 in the world. 1 EV maker https://t.co/SN9Tmh0Kpz pic.twitter.com/prFCNVrYF6
— Bloomberg TV (@BloombergTV) December 27, 2023
BYD is now one of the big players
BYD sold 2023 in total about 3 million cars, including 1.59 million fully electric models and 1.44 million plug-in hybrids. BYD entered the top 10 of the world’s largest car manufacturers for the first time. For comparison, Tesla delivered 1.81 million electric cars in 2023.
Like Tesla, BYD relies on vertical integration, meaning the company has developed many things in-house: its own batteries, its own chips, and so on. This strategy works for both manufacturers.
Tesla and BYD are involved in a serious price war
In a difficult global market environment, Tesla and BYD have been engaged in a fierce price war for more than a year, with which virtually no other manufacturer can or wants to compete. The result: BYD and Tesla remain ahead of the competition in electric car sales. Thanks to their cost advantages, both companies continue to achieve high margins despite price reductions.
BYD already sold more cars than Tesla in the first half of 2022, but is now also beating its American rival in the important electric car segment. You could say that Tesla sold slightly more electric cars than BYD in 2023. However, this does not alter the fact that BYD is growing much faster and the largest electric car manufacturer in the world will come from China in the coming years.
But how could the Chinese overtake Tesla so quickly? A goal that the two largest car manufacturers in the world, Toyota and VW, are miles away from.
BYD surpasses Tesla: there is a master plan behind it
BYD and Tesla are both targeting the mass market and quite a few believe that these brands will displace Toyota and VW from the top spot within a few years. But unlike Tesla, BYD also has relatively cheap electric cars on offer in addition to premium vehicles. China has half a dozen electric car models in its range that are cheaper than Tesla’s Model 3. Currently, there are only vague statements from Musk that Tesla is working on an electric car for $ 25,000.
Government subsidies and relatively low prices for new electric cars have caused sales in China to skyrocket in recent years. In 2022, more than twice as many electric cars were sold in China than in the US, Germany, Great Britain and France combined. And China’s lead as the top electric vehicle market is growing year by year.
Behind the boom in Chinese e-cars lies a long-planned government strategy: It has been supporting dozens of electric car manufacturers for years, aiming to replace carmakers from Europe, Japan and the US in the electric car era. The Chinese market leader BYD, which is also a leading battery manufacturer, particularly benefits from this.
The Chinese battery manufacturers, who have been supplying their technically leading batteries to Tesla, VW and Co. for some time now, delivered, benefited from government financing. Promoting electromobility, including important battery production, is an important step for China in the desired energy transition.
BYD is flexing its battery muscles
BYD is the largest battery manufacturer after CATL – also from China – and the market leader for cheaper and increasingly important lithium iron phosphate batteries (LFP). Because you produce the LFP batteries yourself in large quantities and do not have to purchase them expensively, you achieve cost benefits. As a result, BYD can now produce cheap electric cars in large quantities in addition to expensive models.
These cheap electric models, which have been scarce in Europe and the US until now, are fueling the rise of electric cars in the Middle Kingdom. This gives the Chinese the production scale to beat almost everyone in terms of cost – with the exception of Tesla.
Although Tesla also builds its own batteries in collaboration with Panasonic, the Americans also have to purchase batteries from Asian manufacturers in order to continue to grow rapidly. For example, the German-built Model Y is built with batteries from BYD.
BYD is here to stay
BYD will continue to grow strongly in 2024 and the global growth potential is enormous as the Chinese have sold 90 percent of their cars in the domestic market so far. Now they are trying to gain a foothold in Europe and underline their ambitious ambitions by building Europe’s first electric car factory.
BYD is already relatively strong in Eastern Europe, but whether it will successfully enter the Western European market depends mainly on the important markets of Germany, Great Britain and France.
BYD does not yet play a role in Switzerland; the Chinese are concentrating on the major markets for the time being. The lack of a dealer network in Europe is often cited as an obstacle for new Chinese car brands. Tesla has shown that it can also be done without it. Nevertheless, BYD’s triumph in Europe is anything but certain. Just a few years ago, many thought that Chinese smartphone manufacturers would overrun Europe. That should no longer be the case today. Apple and Samsung dominate, the Chinese brands lag far behind. Xi Jinping’s authoritarian policies and the resulting increasingly strong anti-China sentiment in the West could also hold BYD back.
The EU is also exploring punitive tariffs on Chinese electric cars because China is artificially distorting the market through state subsidies. This is reminiscent of Donald Trump’s sanctions against Huawei. Trump could also become a spoilsport for BYD if he returns to power in 2024. Under President Joe Biden, the US is financing electromobility with billions. BYD already has a factory for electric trucks and buses in the US. Trump, who is close to the oil lobby, could reverse the dial and slow the transition to electric cars. That would hurt BYD, but also Tesla.
Source: Watson

I’m Ella Sammie, author specializing in the Technology sector. I have been writing for 24 Instatnt News since 2020, and am passionate about staying up to date with the latest developments in this ever-changing industry.