Chinese giant BYD announced on Monday that it had sold 3 million units. Sales of battery-powered vehicles in 2023 hit a record high, capping a tumultuous year for China’s electric vehicle industry.
Despite the surge in sales, intense competition and persistent price wars have taken a financial toll on many automakers.
But BYD last year sold 1.6 million fully electric vehicles and 1.4 million hybrid vehicles that run on both battery and gas. This is a 62% increase compared to 2022. BYD is also profitable, with profits tripled to his $1.5 billion in the first half of last year.
Chinese automakers are expected to sell about 9.4 million electric and hybrid vehicles last year, up from 6.9 million in 2022, according to the China Automobile Manufacturers Association. The group said it expects sales to rise again in 2024, reaching 11.5 million units.
Already the world’s largest car market, China is now the fastest growing, leading the transition to electric vehicles that is transforming global industry. China dominates the supply chain for battery-powered vehicles, from mining and processing cobalt and other minerals used in batteries to deploying robots in the factories that make cars and trucks. Electric vehicle companies and their suppliers in China employ approximately 1.5 million people.
A major reason for China’s early lead in electric vehicles was the government’s large financial support for the development of the electric vehicle industry. When financial incentives for consumers expire at the end of 2022, automakers have lowered vehicle prices to attract buyers. Many companies, including BYD, introduced further price cuts this fall, intensifying the price war that started earlier this year.
In November, BYD advertised that it would sell five models at discounted prices of up to RMB 18,000 ($2,550). Another Chinese electric car company, Gee Yue, a partnership between Geely and Baidu, cut the price of all versions of its first model by 30,000 yuan ($4,200) in November.
Tesla, an American automaker with a factory in Shanghai, started cutting prices last year. In January 2023, China lowered prices for the first time in three months, and other countries followed suit.
Tesla is expected to report a big jump in global sales this week after lowering prices late last year and customers taking advantage of U.S. tax breaks. Tesla, founded in 2003, plans to sell about 1.8 million battery-powered vehicles a year, up from 1.3 million in 2022. Tesla accounts for about half of all electric vehicles sold in the United States.
As Tesla and BYD vie to become the world’s most prolific all-electric carmaker, both companies face increasing competition from traditional automakers who are spending billions of dollars to catch up.
“I think the shakeout of the industry is an inevitable trend,” said Cui Dongxiu, secretary general of the China Passenger Car Association, which represents the domestic industry. “However, it is still unclear who will hold the future leadership position in the long term.”
As quickly as China’s electric vehicle sales are rapidly increasing, companies are pouring money into factories and research, often driven by loans from state-owned banks and support from local governments. It has become. Nio, China’s top EV sales brand, announced in November that it would lay off 10% of its employees.
Last year, Tesla lost market share as rivals such as General Motors Co., Hyundai, Ford Motor Co. and Volkswagen introduced more electric vehicles.
BYD, which faces prohibitively high tariffs in the U.S. market, sells most of its cars in China but is expanding globally, especially in Europe.
In December, the company announced that it would build an assembly plant in Hungary that would be Europe’s first production facility for battery-powered vehicles. Germany, Europe’s car manufacturing center, has introduced three electric vehicle models in early 2023. BYD has opened dealerships in Germany, Norway, and Sweden.
As global competition for electric vehicles intensifies, so do the political implications. US policymakers are making it difficult for foreign companies to partner with US companies.
In Europe, lawmakers are also investigating Chinese state aid, which could lead to tariffs from the European Union.
However, the European auto industry cannot ignore China as a customer and business partner.
BMW, which has more than 30,000 employees in China, announced last spring that it would invest about $1.4 billion in battery assembly capacity at its Shenyang plant in northeastern China.
Volkswagen, whose largest sales market is China, is moving more of its supply chain and manufacturing to China. The German giant is hiring thousands of Chinese engineers to design electric vehicles at an industrial park in the central Chinese city of Hefei.
keith bradshire, melissa eddy and jack ewing Contributed to the report.