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

BYD – The world’s largest EV manufacturer! How did they get there? And can they stay on top?

! In 2011, the current world leader was still a laughing stock. .

. “Why do you laugh? Hahaha….

BYD is trying to compete? Why do you laugh? Have you seen their car?

… Well this aged like milk. At the end of 2023, BYD stormed past Tesla to become the number one EV manufacturer on the planet! So is BYD having the last laugh?

Though, to be fair, Elon Musk has since said that BYD is very competitive. Like rapper Drke, BYD started at the bottom before reaching the top! But how did this budget phone battery producer become the best-selling electric car manufacturer?

And how long can they remain number 1? "We will see a big race between BYD and Tesla in the next three to four years! " In the final quarter of 2023, BYD outsold Tesla in battery-only cars – 526,000 to 484,000 – for the first time.

"I think what it really shows is the kind of the change that is happening in the car industry at the moment. Most of BYD sales have been within China. It's their biggest market, about 90% of their sales and a lot of their stuff there is done on selling in big volumes and at quite competitive prices.

. " This was not a complete surprise, as it was the second year in a row they'd beaten Tesla in terms of production. But the first time around, the figures included BYD’s EVs plus their hybrids.

So, at the IAA in Munich in 2023, BYD was more than happy to flex. ‘In last year, with 1. 86M new energy vehicle car sales, which is 3 times of the previous year.

BYD become the world number 1 new energy vehicle brand. ’ Now it’s beating Tesla with EVs ONLY! BYD or Build Your Drams, once a small startup with just 20 employees back in 1995, has evolved into an electric car giant.

Founded by chemist Wang Chuanfu in China, it initially manufactured lithium-ion batteries for mobile phones just as the smartphone trend took off. Business boomed supplying giants like Motorola and Nokia. Chuanfu had already been interested in battery technology as a student.

In 2003, BYD ventured into cars by acquiring Xi’an Qinchuan Automobile. This was the start of BYD Auto. The F3 -- its first combustion-engined car, which looked similar to the Toyota Corolla -- debuted in 2005.

But it was much cheaper than a Corolla. By 2008, BYD entered the electric vehicle space with the F3DM. It was the world's first mass-produced plug-in hybrid automobile.

A flop at the time. Still: A $232 million investment from Warren Buffett in 2008 fueled BYD's EV ambitions. In 2020, BYD launched the Blade Battery, an LFP – or Lithium Iron Phosphate – battery, which cost less than other types of Lithium Ion batteries used in EVs.

BYD's Blade was more compact and seen as safer as well. A clever move. The Han, BYD's sporty sedan, and subsequent models incorporated the Blade Battery.

BYD's EV sales surged from almost 131,000 in 2020 to 1. 57 million in the following year. "The battery is the most expensive part of the car.

It's about 40% of the cost of an electric car is the battery. And if you have competencies in a battery, also innovation-wise but also cost-wise, then you have a big advantage in building electric cars. " China EV Domination  Like NIO before them, BYD is eyeing global markets -- especially Europe, where they're launching three of their models.

So it's no coincidence that BYD was named the official EV sponsor of the Euro 2024 football championships. That could be another nail in the coffin for the German auto industry, as this was long Volkswagen's golden ticket. Now BYD is on everyone's lips.

"Come on, begin your wonderful trip with BYD ATTO 3! What kind of car is this? Does it run on gasoline?

No, this car is very environmentally friendly. Yes, it's fully electric. I can't hear any sound at all.

BYD can no longer say they're the biggest car brand you’ve never heard of! Already a giant in Asia, they're expanding around the globe. "Keep exploring the world together!

Move towards and strive for the halo! " ‘Since launching the passenger car brand in Europe last October, BYD entered 15 European countries within just 11 months’ The rise of Chinese EVs and BYD owes much to a push by the Chinese government. The EV industry has enjoyed huge tax breaks.

That's led to BYD's domination domestically, with a market share of 35% in China, compared to Tesla’s 7. 8%. "The biggest difference, if you look at them, is where they compete.

Tesla still kind of has a kind of fairly style and design and there's real desire around that Tesla badge and brand now. Whereas BYD much more competes on price, but it's kind of offering more for the same price as other car firms. " BYD has been able to undercut Tesla, pricing their cars a lot cheaper, thanks to the subsidies.

But there's another secret to their success. Unlike Tesla, BYD went for the lower hanging fruit: fleets & buses, enabling them to produce batteries in mass quantities. That battery development has been key to their success, giving them a huge advantage over their U.

S. and European rivals. Unlike many of their competitors, BYD produces large parts of their cars themselves -- helping them avoid extra 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 about 75% of added value in the car that they make themselves. And this brings them to this position they are now. " BYD calls this vertical integration.

‘Our vertical integration capability gives us the flexibility to have a faster response to the market trend, as well as better support for brand development and customer services’. BYD is actively securing lithium deposits, to strengthen their vertical integration. Their successful formula looks set to continue.

The Battle For Number One  For BYD to stay at number one they need to expand, and this road may not be as smooth as the domestic one has been. But growing demand in Southeast Asia & Australia certainly helps, and BYD already has a significant market share in Thailand. But Europe poses tougher problems.

The aggressive expansion of the Chinese auto industry into Europe has ruffled some feathers. The EU Commission is investigating Chinese EV imports, which could lead to increased tariffs. This move is driven by concerns about unfair competition, because of those state subsidies we mentioned earlier.

But this is a double-edged sword that could do more harm to European car brands. "We see that German manufacturers are not really happy that there's a discussion of imposing taxes to Chinese manufacturers. Because they know if the Chinese get problems in Europe and there were regulatory hurdles for the Chinese players coming to Europe, the same will happen then in China too.

" "BYD says it will build a new electric car factory in Hungary. This coming the first Chinese company to make cars in Europe! " The investigation aims to push manufacturers, including BYD, to open plants in the EU.

As a response, BYD is looking to build a factory in Hungary. The EU is also working on establishing its own battery supply chain, tackling challenges such as obtaining critical raw materials domestically. And the U.

S. ? It's an even tougher market to crack.

Tensions between China and the U. S have meant that BYD is taking a less aggressive approach to entering this territory. "The geopolitical conflict between China and the US is a big hurdle.

And I think what could happen is that BYD, after being successful in Europe, is thinking about building up plants in the US. Without building up plans and have a supplier base in the US, it will be very hard for the Chinese companies, especially BYD, to be successful. " Though they've supplied electric buses to the U.

S. for years, BYD have not entered the car market there. And it looks like it will stay that way for now as the U.

S. currently imposes a 27. 5% tariff on automotive imports from China.

Tesla’s long-rumored, low-cost EV has yet to materialize. But it could provide an answer to the cheap EVs that have flooded the market from China. "It's really important for Tesla to offer also a car in a lower segment.

A segment of the small-sized cars beginning, for instance, at 25,000 euro. And I'm pretty sure Tesla is working very hard on such a model. There are rumors that next year this Model 2 maybe that's the name will be produced and offered.

" A New King In Town? While BYD currently wears the crown taken from Tesla, this is a marathon and not a sprint. "These two that will be ahead of the pack so to say.

Volkswagen as a car group is also strong but there's a gap between these two and I would say that the BYD would lead the electric car ranking for the next few years. " "So I think perhaps the most interesting thing is less about the battle between Tesla and BYD and more about what the big established manufacturers that have a hundred years of history in making cars are going to do to catch these upstarts. " So while these two EV giants duke it out, German brands like VW seemingly sit and watch from the sidelines hoping for scraps.

What is clear, if German brands want to compete with BYD and Tesla, the key factors are innovation and price. "German manufacturer especially to be at least as innovative as Tesla and the Chinese players. And if they are not more innovative than Tesla and the Chinese it's clear they can't be more expensive!

" But could we see another Chinese brand come out of nowhere and replicate BYD’s success? Like automotive giant Geely? "Geely is for me a very interesting global player of the future: because they have a quite broad product portfolio and we also see that they are quite Innovative in the electromobility sphere.

So I would also bet on the Geely group as an important competitor of the future. ” We're witnessing the emergence of an EV price war across global markets as legacy brands respond and these new players look to dominate. This is a win for consumers, one that looks set to prolong the boom in EV sales.

But the geopolitical climate means this road is not a smooth one, so unless other car manufacturers innovate soon, BYD will be hard to dethrone. What do you think? Leave us a comment and don’t forget to subscribe to our channel!