Monday, July 22, 2024

BYD dethroned Tesla from the throne of electric cars

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Beijing/New York – BYD, the automobile manufacturer, surpassed its American rival Tesla after delivering the highest number of electric cars in the last quarter of 2023, thereby displacing it from the throne of this promising market.

This comes amid expectations that the growing Chinese company will retain its leading position due to strong support from Chinese authorities to strengthen the local market.

The US company announced on Tuesday that it delivered 484,500 electric cars between October and December, ranking second behind BYD for the first time.

The Chinese company is one of the leading brands of electric cars in China. It was founded in 1995 in the southern Chinese city of Shenzhen, where several technology groups, including Huawei and Tencent, are headquartered.

Neil Sanders: Tesla will face strong competition in China in 2024

BYD will stop producing cars with combustion engines in 2022 to focus on hybrid and electric models.

According to calculations conducted by Agence France-Presse based on data published by the Chinese group, the company delivered 526.4 thousand electric cars in the last quarter of last year.

In 2011, Tesla CEO Elon Musk mocked BYD, saying at the time it was a small local manufacturer and “not” a real competitor. During an interview with Bloomberg at the time, he asked, “Have you seen their cars?”

“BYD has benefited in large part from the Chinese government's strong support for electric vehicles,” global data director Neil Saunders told AFP.

“This helps boost local demand, which strengthens BYD's position in the export market,” he pointed out.

The brand currently supplies batteries to the world's major manufacturers, including Tesla, BMW, Mercedes and Audi.

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Last year, BYD also became the world's first manufacturer to reach the symbolic milestone of producing 5 million electric cars.

According to Sanders, Tesla is “a dominant player in the electric vehicle market,” but “will face more competition from China this year.”

While the US automaker's year-end sales largely helped deliver 1.8 million cars, it fell short of CEO Elon Musk's ambitious annual internal target of two million cars.

Tesla led all of last year, with a 38 percent year-over-year increase, while BYD delivered 1.57 million vehicles, up 73 percent.

In an effort to boost sales before some models of the Tesla Model 3 compact sedan lose US federal tax credits in 2024, Tesla has increased offers such as six months of free express shipping if deliveries are made by the end of December.

During its third-quarter results presentation in late October, Tesla indicated it wanted to ramp up production “as quickly as possible.” At the end of last November, after a long wait, the American company started offering Cybertruck vehicles, which are small electric trucks with forward-facing chassis, which were unveiled in November 2019.

Susanna Streeter, head of finance and markets at Hargreaves Lansdowne, said: “BYD's deliveries show that the price cuts have benefited the Chinese company.” “The war will hurt profit margins for both companies, but it's clear that the Chinese company believes it's a price to pay to increase its market share and recognition,” Streeter added.

Millions of electric cars were produced by BYD, the world's first manufacturer

Analysts believe Tesla will have to continue the price cuts it began in January of last year, which pushed sales into the fourth quarter, after tax breaks under the Affordable Care Act expire.

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“Tesla is still forced to cut prices, especially for cars that have lost tax credits, such as Model 3 versions,” Seth Goldstein, equity strategist at Morningstar, told Reuters.

Rear-wheel drive and long-range Model 3 variants will not enjoy a $7,500 federal tax credit this year as updated requirements for sourcing battery materials take effect under the U.S. Inflation Act.

However, Goldstein said, “most of the price cuts are in response to U.S. Federal Reserve interest rate hikes, so Tesla may maintain prices if borrowing costs begin to decline.”

Tesla is facing scrutiny from regulators over its self-driving technology and safety concerns, with the company recalling more than two million cars last month to install new safeguards in its advanced driver assistance system.

Gary Bradshaw, portfolio manager at Tesla partner Hodges Capital, said the US company's delivery numbers were “much better than the local US car companies”.

Smaller local rival Rivian announced deliveries, with the company missing market valuations amid a broader decline in demand for electric vehicles. This weakness has prompted U.S. automakers including Ford and General Motors to be more cautious in their production efficiency plans.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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