In the rapidly evolving world of electric vehicles (EVs), the year 2023 is proving to be a pivotal moment, with the sector undergoing a significant transformation in terms of market share. While Tesla (NASDAQ: TSLA) has long been synonymous with electric cars, there has been a remarkable global market share dynamics shift, with China-based BYD stealing the spotlight.
In particular, data acquired by Finbold indicates that in the first half of 2023, BYD sold 1,191,405 electric vehicles, representing an average of 198,567 units per month. BYD’s unit sales surpassed Tesla’s 888,879 by 302,526 vehicles. Over the initial six months of 2023, the American EV maker averaged 148,146 vehicle sales per month. The units include battery electric vehicles and plug-in hybrid electric vehicles.
Other top sellers include BMW with 220,795 units, followed by GAC Aion at 212,090 EVs, while Volkswagen sold 209,852 units. Notably, among the top eight EV sellers, only manufacturers from China, Germany, and the United States are represented. China accounts for four manufacturers or 50% of the list.
Tracking BYD’s growth in EV sales
BYD’s remarkable ascent has occurred despite previous persistent concerns regarding the quality and safety of China’s electric vehicles. The company has often been in the shadow of industry giants such as Tesla and other established traditional players. However, several factors have propelled the company’s electric vehicle success, with a significant contribution from the domestic market.
One noteworthy aspect of BYD’s appeal has been its commitment to offering value for money, coinciding with local demand for homemade affordable products amid a slowing Chinese economy. The company’s vehicle models are priced lower than their foreign competitors.
BYD’s manufacturing of most components further contributes to cost reduction, and any components it doesn’t produce are readily available from Chinese suppliers. It is worth highlighting that this cost-efficiency has been particularly advantageous amid the supply chain disruptions triggered by the pandemic, which affected manufacturers like Tesla.
Additionally, BYD benefited from its strategic location in Shenzhen during the pandemic. Shenzhen experienced fewer stringent lockdown measures than Shanghai, where Tesla operates its largest overseas plant. This geographical advantage allowed BYD to maintain a smoother production process and potentially gain a competitive edge during challenging times.
Like other Chinese EV manufacturers, BYD has thrived due to a decade of government subsidies. These subsidies are part of China’s drive to transition from gasoline-powered vehicles and become a global renewable energy leader. Moreover, the government offers incentives like subsidies and tax breaks to encourage the adoption of low-emission vehicles.
Tesla’s attempts to catch up
In contrast, Tesla’s trailing behind BYD is somewhat unexpected, given that Tesla is one of the early pioneers of electric vehicles and has been working to ensure the global availability of EVs. Like many other companies, it’s important to mention that Tesla faced supply chain disruptions due to the pandemic, which affected its production numbers. However, the company aims to catch up with its competitors by commencing production at the Austin facility.
The company has implemented several strategic measures to boost sales, particularly in light of increased competition. Tesla is addressing the pricing issue by significantly reducing prices, especially for older models. While these price cuts have sparked controversy among existing owners, CEO Elon Musk hinted in July that the company may continue with such reductions.
It’s worth noting that China ranks among Tesla’s top markets, and the company has also reduced prices in the region while increasing discounts and other incentives to manage inventory and protect against competition and economic uncertainty.
Banking on the Cybertruck
At the same time, Tesla is counting on the hype surrounding the Cybertruck to regain market share from BYD. The Cybertruck represents Tesla’s bold venture into the traditionally conservative pickup truck segment, boasting remarkable range, impressive towing capabilities, and acceleration that could rival high-performance cars, appealing to a wide range of consumers.
This was underscored by a previous report from Finbold, which indicated that the company was receiving 1,000 daily Cybertruck reservations. It remains to be seen if these reservations will translate into actual sales, given the intensifying competition in the market.
Looking ahead, BYD’s focus is on expanding globally. While it has successfully sold electric buses in the U.S., India, and Japan, the company aims to enter the international car market.
On this end, Tesla might have an advantage, considering the company already has a global footprint, solidifying its position in the U.S. and Europe with Berlin and Austin plants ramping up pro. However, the firm remains on the lookout for other entities, such as Rivian (NASDAQ: RIVN).