BYD-Tesla: a match for the title of world electric car champion
Posted January 23, 2023, 1:40 p.m
Will the electric car world champion Tesla be dethroned by China’s BYD in 2023? The scenario is likely given the extraordinary growth of the manufacturer based in Shenzhen, in the southernmost part of China.
At this stage, the American manufacturer is resisting: Tesla sold 1.3 million electric cars worldwide in 2022, while BYD sold 911 thousand units. But BYD has already beaten Tesla when counting plug-in hybrids with a total of 1.86 million new energy vehicles (VENs).
If the worldwide American manufacturer still has a head start, BYD has rapidly expanded its model range, geographic footprint and production capacity in recent years. For a winning result: BYD’s sales triple in 2022, thanks to the dynamism of the Chinese market, where 4 million pure electric cars were sold last year, five times more than in the US!
On its own, the Chinese group, which was born in the cell phone battery sector in 1995, now monopolizes 30% of the Chinese market for new energy vehicles (VEN), taking market share from Tesla. America shipped nearly 440,000 cars to China last year (+37%), but had a tough year with deliveries falling short of expectations and production at its giant factory in Shanghai falling.
The outcome of the Tesla/BYD math will depend heavily on pricing strategies. With big price cuts in the U.S., Europe and China, Tesla is showing its willingness to wage a price war to maintain sales growth. On Jan. 6, Tesla announced a further cut in the selling price of its cars in China for the second time in three months, angering some new owners who are demanding compensation.
With price cuts in October and then December, Tesla cars are now 30-40% cheaper in China than in the U.S.: The starting price for a Model Y produced at the Shanghai factory is now 259,900 yuan. (€35,800), 43% less than the standard version available in the US. Tesla also cut the price of the Model 3 by 14% to 229,900 yuan (€31,600), or about 30% less than in the US.
BYD starts luxury
Faced with increasingly tough competition, Elon Musk’s cars are no longer the only cars inspiring wealthy Chinese. Tesla faces the increasing rise of domestic manufacturers such as BYD, XPeng, Nio, but also international players such as Porsche or Mercedes.
Chinese startups (XPeng, Nio, Li Auto) have never targeted the low-end market and are able to offer quality (and ultra-connected) cars at competitive prices. As for BYD, it has continued to climb high and, ironically, even allowed a price hike on one of its most popular models late last year.
The manufacturer, founded by the reticent Wang Chuanfu, formerly an engineer specializing in rare earths, has just launched a brand dedicated to luxury electric vehicles.
Equipped with the most innovative technologies of the group, two models (an SUV and a sports car) will be launched this year, with a price of more than 1 million yuan (138,000 euros).
BYD on board
Since BYD’s sales are still largely concentrated in China, the automaker’s success will depend on how the local market develops and how well China’s economy emerges from zero Covid.
BYD, which attracted a lot of attention at the last Paris Motor Show, began to take over the world. The numbers are still modest: since last summer, BYD has exported about 56,000 vehicles, mainly to the Netherlands, Thailand and Australia. But the maker wants to gain momentum in Europe as well as in India, where it has just launched (it plans to launch in the UK soon), with ambitions to become number two in the auto industry behind homegrown Tata and grab a 40% share. 2023 promises a close matchup between BYD and Tesla.