Will China’s BYD Co Overtake Tesla as the Biggest Seller of EVs?

BYD Co (BYDDY), China’s best-selling automaker, is closing the gap with Tesla (TSLA) in becoming the world’s largest seller of electric vehicles (EVs).  BYD Co sold 431,603 fully electric vehicles in the three months ended September 30, up +23% from the second quarter.  Meanwhile, Tesla sold 435,059 EVs in the same period, showing a 3,456 gap that is the narrowest yet between the two companies.

BYD has made progress in broadening its appeal by adding two luxury EV vehicles to its lineup.  The company added the Yangwang and Fang Cheng Bao vehicles, which sell for 1 million yuan ($137,000), more than double the price of some of its earlier higher-end vehicles.  BYD is more profitable than most EV makers as it makes its own batteries and semiconductor chips.  Growing exports are also boosting BYD’s global presence as it seeks a larger chunk of overseas sales to supplement its dominance in China.

BYD has been successful in expanding into foreign markets.  According to Bloomberg Intelligence, exports accounted for 9% of the company’s Q3 sales, up from 5% the previous quarter.  However, BYD is facing new headwinds in Europe as the European Union launched an investigation into Chinese subsidies for electric vehicles. Given the size of the market and the rapid growth of electric vehicles, potential tariffs from the probe could have a larger impact than any previous anti-subsidy actions against Chinese imports.     

Shares of Tesla are down more than -2% today after it cut prices on its top-selling models in the U.S. again after Q3 vehicle deliveries disappointed.  Tesla shaved as much as $2,250 off its Model 3 and $2,000 off its Model Y sport utility vehicles in an attempt to boost demand.  Tesla delivered 435,058 vehicles in Q3, down from the previous quarter and around 20,000 fewer than the market consensus.  Tesla will need to deliver over 475,000 vehicles in Q4 to meet its target of 1.8 million vehicles for the year.

Some analysts believe BYD Co is now poised to overtake Tesla as the world’s largest EV automaker. Snow Bull Capital, which owns shares in both automakers, said, “BYD will sell more fully electric passenger vehicles than Tesla in the fourth quarter.” BYD Co remains on track to sell 1.8 million EVs this year, the same as Tesla, and up from 1.31 million sold in 2022. The company, which also sells hybrid vehicles, plans to sell 3.6 million total vehicles this year, putting it in the global top 10 automakers by unit sales.  BYD Co surpassed Volkswagen this year as the bestselling car brand in China and now looks to become the biggest EV-selling brand in the world.  

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.