Experts Warning: If BYD Sells in the US, It Will “Destroy” the EV Market, as BYD Outsells Tesla in the Most Recent Quarter

Top electric vehicle manufacturer in China, BYD, has outsold Tesla. establishing it as the largest EV manufacturer by the end of 2023. It sold about 525,000 vehicles, compared to about 485,000 sold by Tesla. Both corporations had record-breaking quarters.

Car Coach Reports’s automotive expert, Lauren Fix, offers her analysis of the outcome.

Elon Musk’s Tesla (TSLA) beat BYD in total sales for the year, selling 1.8 million electric vehicles. In addition to 1.44 million hybrid cars, BYD sold 1.57 million electric cars, a 73% increase over 2022.

However, this implies that Tesla’s lead over its Chinese competitor was much closer in 2023—at roughly 230,000 units—than it was in 2022—when 400,000 units were recorded.

BYD’s explosive expansion, supported by Warren Buffett, is a representation of China’s burgeoning electric vehicle market.

China’s move towards electric vehicles is moving along swiftly because of the industry’s robust government support. Additionally, its automakers have been aggressively entering the European market, alarming long-standing rivals like Volkswagen and Renault. Chinese state subsidies are the subject of an examination by EU policymakers.

Beijing has set a goal to have new energy vehicles (NEVs), which comprise BEVs, plug-in hybrids, and hydrogen fuel cell vehicles, account for at least 20% of all new cars sold in China by 2025. The government states that NEV sales should get into the “mainstream” of new automobile sales by 2035.

About three years early, in 2022, the first aim was accomplished. It’s possible that the second will arrive sooner than anticipated.

Data released this month by the China Association of Auto Manufacturers shows that 8.3 million new energy vehicles were sold in the first 11 months of 2023, making up over 30% of all car sales.

According to official media, Miao Wei, a former minister of China’s Ministry of Industry and Information Technology, stated at an automobile symposium in November that the government’s goal of 50% NEV adoption by 2035 is probably going to be reached by 2025 or 2026 at the latest.

Analysts attribute China’s dominant position in the global business to its large market, low labour costs, and control over the supply chain.

“China is now leading in production and increasing its comparative edges, banking on its massive domestic market and the first mover advantage,” French investment bank Natixis Asia analysts stated in a study published in late November.

Chinese EV manufacturers have found it simple to grow both locally and globally, they claimed, thanks to their first mover advantage and government support in the form of infrastructural investments and subsidies.

But last year’s fierce pricing battle and heightened competition hurt several automakers’ profit margins.

The downturn in demand was a concern for automakers as China’s economy lost steam. Tesla started a price war in January when it lowered prices in China in an effort to draw in customers and halt its declining growth. To stay competitive, dozens other automakers used a similar strategy.

Sales have increased as a result of the pricing battle, but industry profitability is at risk. China’s automobile sector reported a profit margin of just 5% for the first eleven months of last year, which was less than 2022’s 5.7% and 2021’s 6.1%, according to data released by the government-backed Chinese Passenger Car Association.

Chinese automakers have been looking for development outside of the mainland by growing in Southeast Asia, Europe, and Australia to counteract the slowing local market.

In September of last year, BYD sent a sizable group to a car show in Germany. At the time, a business spokesperson stated that the company planned to increase its dealer network in Europe by 50% by 2023 and increase its foreign sales to 250,000 from roughly 56,000 in 2022.

It declared last month that it would establish its first passenger car production in Europe in Hungary, an EV factory. In Komárom, Hungary, it already operates a bus plant.

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