China’s BYD sells more electric cars than Tesla

Editor’s note: Sign up for CNN’s “while in china” newsletter, which explores what you need to know about the rise of China and its impact on the world.

Hong Kong/New York
CNN
—

BYD overtook Tesla in the final quarter of 2023 to become the world’s largest electric car company.

Chinese companies sold a record number of cars last year, including 525,409 battery electric vehicles (BEVs) in the three months to December 31, according to stock exchange filings. Tesla on Tuesday said it delivered 484,507 vehicles during the quarter, which was also a record.

For the year as a whole, Elon Musk’s Tesla (TSLA) still outsold BYD, selling 1.8 million electric vehicles. BYD sold 1.57 million electric vehicles in 2022, an increase of 73%, and also sold 1.44 million hybrid vehicles.

But that means the gap between Tesla and its Chinese rival will be about 230,000 units in 2023, much narrower than the 400,000 units in 2022.

The rapid growth of Warren Buffett-backed BYD is a symbol of the rise of China’s EV industry.

China is progressing rapidly The transition to electric vehicles is underway, thanks to strong government support for the industry. And automakers are expanding into Europe, under the watchful eye of traditional rivals such as Volkswagen and Renault. EU policymakers have launched an investigation into Chinese state aid.

The Chinese government has set a goal for at least 20% of new cars sold annually in China to be new energy vehicles (NEVs), including BEVs, plug-in hybrids and hydrogen fuel cell vehicles, by 2025. The government says NEVs should become “mainstream” in new car sales by 2035.

The first goal was achieved in 2022, about three years early. The second time may also arrive sooner than expected.

According to data released by the China Automobile Manufacturers Association last month, 8.3 million new energy vehicles were sold in the first 11 months of 2023, accounting for more than 30% of total car sales.

According to state media, former Minister of Industry and Information Technology Miao Wei said at an automotive forum in November that the government’s goal of 50% NEV penetration by 2035 could be achieved by 2025 or 2026 at the latest. He said it was highly sexual.

Analysts say China’s leading role in global industry is also due to its market size, cheap labor and supply chain advantages.

“China currently leads in production and is leveraging its huge domestic market and first-mover advantage to increase its comparative advantage,” analysts at French investment bank Natixis Asia said in a report at the end of November. .

First-mover advantages and government support through infrastructure investment and subsidies have made it easier for Chinese EV makers to expand domestically and internationally.

However, increased competition and fierce price wars last year affected many automakers’ profit margins.

Automakers were worried about a slowdown in demand as China’s economy lost momentum. In January, Tesla cut prices in China in a bid to attract customers and stop growth slowing, sparking a price war. Dozens of automakers followed suit to stay competitive.

Although price competition increased sales, it threatened the industry’s overall profitability. In the first 11 months of last year, China’s auto industry recorded a profit margin of just 5%, followed by 5.7% in 2022 and 6.1% in 2021, according to figures released by the China Passenger Car Association, a government-backed industry group. below.

To offset the slowdown in the domestic market, Chinese automakers are seeking growth outside the mainland by expanding into Europe, Australia and Southeast Asia.

BYD sent a large delegation to the German car show last September. A spokesperson said at the time that the company aims to double the number of dealer partners in Europe in 2023 and increase overseas sales to 250,000 units from about 56,000 units in 2022.

Last month, the company announced that it would build an electric vehicle plant in Hungary, its first passenger car plant in Europe.that We already have a bus factory in Komárom, Hungary.