How BYD killed Tesla! But can they stay on top?

BYD: the largest electric vehicle manufacturer in the world! How did

they

get there? And can

they

stay

on top? In 2011, the current world leader was still a laughingstock… “Why are you laughing? Ha ha ha…. Is BYD trying to compete? Why are you laughing? Have you seen his car?… Well, it is as old as milk. By the end of 2023, BYD surpassed Tesla and became the number one electric vehicle manufacturer on the planet! So will BYD have the last laugh? Although, to be fair, Elon Musk has since said that BYD is very competitive. Like rapper Drake, BYD started from the bottom before making it to the top!

But how did this budget phone battery maker become the best-selling electric car maker? And how long can they remain number 1? "We will see a big race between BYD and Tesla in the next three or four years!" In the final quarter of 2023, BYD outsold Tesla in battery-only cars (526,000 vs. 484,000) for the first time. "I think what it really shows is the kind of change that's happening in the car industry right now. Most of BYD's sales have been in China. It's their biggest market, around 90% of their sales. and many of its things are sold in large volumes and at quite competitive prices." This wasn't a total surprise, as it was the second year in a row that they beat Tesla in terms of production.

But the first time, the figures included BYD's electric vehicles plus its hybrids. So at the IAA in Munich in 2023, BYD was more than happy to flex. “Last year, 1.86 million new energy vehicles were sold, three times more than the previous year. “BYD becomes the world’s number one new energy vehicle brand.” You are now outperforming Tesla ONLY with EVs! Once a small startup with just 20 employees in 1995, BYD or Build Your Dreams has become an electric car giant. Founded by chemist Wang Chuanfu in China, it initially made lithium-ion batteries for mobile phones just as the smartphone trend took off.

The business flourished supplying giants such as Motorola and Nokia. Chuanfu had already become interested in battery technology when he was a student. In 2003, BYD entered the automobile sector by acquiring Xi'an Qinchuan Automobile. This was the beginning of BYD Auto. The F3, its first combustion engine car, which looked like the Toyota Corolla, debuted in 2005. But it was much cheaper than a Corolla. In 2008, BYD entered the electric vehicle space with the F3DM. It was the world's first mass-produced plug-in hybrid car. A failure at the time. Still: A $232 million investment from Warren Buffett in 2008 boosted BYD's electric vehicle ambitions.

In 2020, BYD launched Blade Battery, an LFP (or lithium iron phosphate) battery, which costs less than other types of lithium-ion batteries used in electric vehicles. BYD's Blade was more compact and was also considered safer. A smart move. The Han, BYD's sports sedan, and later models featured the Blade battery. BYD's electric vehicle sales rose from nearly 131,000 in 2020 to 1.57 million the following year. "The battery is the most expensive part of the car. Approximately 40% of the cost of an electric car is the battery. And if you have competencies in a battery, also in terms of innovation but also costs, then you have a big advantage in the construction of electric cars".

Domination of electric vehicles in China. Like NIO before them, BYD is targeting global markets, especially Europe, where they are launching three of their models. It is therefore no coincidence that BYD has been named the official EV sponsor of the Euro 2024 football championship. This could be another nail in the coffin for the German car industry, as it was Volkswagen's golden ticket for a long time. . Now BYD is on everyone's lips. "Come on, start your wonderful journey with BYD ATTO 3! What kind of car is this? Does it run on gasoline? No, this car is very eco-friendly. Yes, it is fully electric.

I can't hear any sound. BYD no more can say it's the biggest car brand you've never heard of. They are already a giant in Asia and are expanding all over the world. Keep exploring the world together! Move forward and fight for the halo! 'Since the launch of the passenger car brand in Europe last October, BYD entered 15 European countries in just 11 months'    The rise of Chinese electric vehicles and BYD is largely due to the push of the Chinese government. The industry has enjoyed huge tax breaks. That has led to BYD's dominance domestically, with a 35% market share in China, compared to Tesla's 7.8%. "The biggest difference, if you look at them, is where they compete.

Tesla still has quite a nice style and design and now there is a real desire around that Tesla badge and brand. Whereas BYD competes much more on price, but offers more for the same price as other car companies. BYD has been able to undercut Tesla's price, pricing its cars much cheaper, thanks to subsidies. But there is another secret to its success. Unlike Tesla, BYD opted for the easiest: fleets and buses, which allowed them to produce batteries in massive quantities. That battery development has been key to their success, giving them a big advantage over their American and European rivals.

Unlike its competitors, BYD produces much of its cars, helping it avoid additional costs, delays and logistical problems that have hurt companies like Tesla. "That is one of the competitive advantages of BYD, that they have a high added value of approximately 75% of the added value in the car that they themselves manufacture. And this leads them to the position they are in now." BYD calls this vertical integration. "Our vertical integration capability gives us the flexibility to have a faster response to market trends, as well as better support for brand development and customer services." BYD is actively securing lithium deposits to strengthen its vertical integration.

It seems that their successful formula will continue. The battle for number one For BYD to remain at number one they need to expand, and this path may not be as easy as the national one. It has been, but growing demand in Southeast Asia and Australia certainly helps, and BYD already has significant market share in Thailand. But Europe poses more difficult problems. The aggressive expansion of the Chinese auto industry in Europe has irritated some. investigate imports of Chinese electric vehicles, which could lead to tariff increases. This measure is driven by concerns about unfair competition, due to the state subsidies we mentioned above.

But it is a double-edged sword that could cause more damage to European car brands. "We see that German manufacturers are not very happy with the debate about imposing taxes on Chinese manufacturers. Because they know that if the Chinese have problems in Europe and there are regulatory obstacles for Chinese players coming to Europe, the same will happen in Europe. China too." "BYD says it will build a new electric car factory in Hungary. It will be the first Chinese company to make cars in Europe!" The investigation aims to pressure manufacturers, including BYD, to open plants in the EU.

In response, BYD is looking to build a factory in Hungary. The EU is also working to establish its own battery supply chain, addressing challenges such as sourcing critical raw materials domestically. And the United States? It is an even more difficult market to penetrate. Tensions between China and the United States have caused BYD to take a less aggressive approach to entering this territory. "The geopolitical conflict between China and the United States is a big obstacle. And I think what could happen is that BYD, after having success in Europe, is thinking about building plants in the United States.

Without building plans and having a supplier base In the United States, it will be very difficult for Chinese companies, especially BYD, to succeed." Although they have supplied electric buses to the United States for years, BYD has not entered the car market there. And it looks like it will

stay

that way for now, as the United States currently imposes a 27.5% tariff on auto imports from China. Tesla's long-rumored low-cost electric vehicle has yet to materialize. But it could provide an answer to the cheap electric vehicles that have flooded the market from China. "It is very important for Tesla to also offer a car in a lower segment.

A small car segment that starts, for example, at 25,000 euros. And I am quite sure that Tesla is working very hard on such a model. "There are rumors of that next year this Model 2 will be produced and offered, maybe that's the name." A new king in town? While BYD currently holds the crown from Tesla, this is a marathon and not a sprint. "These two will be ahead of the rest, so to speak. Volkswagen as a car group is also strong, but there is a gap between these two and I would say that BYD would lead the ranking of electric cars for the next few years. "So I think perhaps the most interesting thing is less the battle between Tesla and BYD and more what the big established manufacturers that have a hundred years of history in car manufacturing are going to do to catch these upstarts." So, while these two EV giants face off, German brands like VW apparently sit back and they watch from the sidelines waiting for leftovers.

What is clear is that if German brands want to compete with BYD and Tesla, the key factors are innovation and price "The German manufacturer must be at least as innovative as Tesla and the. Chinese. And if they are not more innovative than Tesla and the Chinese, it is clear that they cannot be more expensive! "But could we see another Chinese brand emerge out of nowhere to repeat the success of BYD? Like the automotive giant Geely?" For me, Geely is a very interesting global player of the future: because it has a fairly broad product portfolio and we also see that they are quite innovative in the field of electromobility.

So I would also bet on the Geely group as a major competitor of the future." We are witnessing the emergence of an electric vehicle price war in global markets as legacy brands respond and these new players seek to dominate. This is a victory for consumers, which looks set to prolong the boom in electric vehicle sales. This path is not easy, so unless other automakers innovate soon, it will be difficult to dethrone BYD. What do you think? Leave us a comment and don't forget to subscribe to our channel!