Tesla Toppled From Top EV Spot by Chinese Manufacturer BYD

Written by: Susannah Streeter | Hargreaves Lansdown

  • Chinese automaker BYD has toppled Elon Musk's Tesla as the world's biggest-selling manufacturer of EVs. 
  • The firm sold a record 526,000 battery-only vehicles in the last three months of 2023. 
  • That was helped by a more than 70% surge in sales in December amid a price war.
  • Tesla has released its latest quarterly vehicle production and delivery figures which show it sold 484,507 in the fourth quarter.
  • Lack of ultra rapid charge points on UK motorways risk putting a brake on UK EV sales.

Tesla has been forced out of pole position by BYD, a manoeuvre that had been predicted as soon as the Chinese automaker released its latest set of storming sales numbers. As BYD has accelerated into the fast lane, it’s fresh evidence of just how competitive the EV market has become and how hard it will be for Tesla to swerve back to head the pack. Even though Tesla’s sales reached a record level and exceeded expectations in Q4, it wasn’t enough to fend off the competition from its Chinese rival. BYD used to claim it was the biggest brand we’ve never heard of, but it’s a household name in China, and is one to be watched as EV sales ramp up around the world. 

It was already getting tougher for Tesla in China before the latest price war took hold. Tesla had reduced costs of popular models to increase sales but was hit by a storm of competition as BYD unveiled a super-aggressive pricing campaign at the end of the year. The fight will hurt margins for both companies, but BYD clearly believes it’s a price worth paying to increase market share and recognition. 

This development is further evidence of China’s growing clout in the EV industry, helped by deep battery supply chains. Part of the reason why BYD feels it can afford steep discounting is because it manufacturers batteries in house, which has been cheaper, rather than outsourcing them. While it’s the world’s leading supplier of rechargeable batteries, Tesla relies on several suppliers and has flagged shortages of lithium as demand ratchets up as a supply chain obstacle in the years to come. BYD is already making moves to secure the precious metal by buying a stake in a Chinese lithium producer, it’s had its eye on purchasing mines in Africa and is scouting assets in South American where the metal is mined.

It may not be plain sailing for BYD’s forays into European markets. The European Commission has launched an anti-subsidy investigation into the imports of EVs from China amid concern about unfair competition. This could result in duties being levied on Chinese made EVs, to ensure that European manufacturers don’t become casualties of cut-price imports. 

Elon Musk has in the past somewhat surprisingly doffed his cap to the prowess of Chinese automakers, calling them the most competitive in the world. But he will of course now be looking at ways to outsmart them in other markets. Right now, shares have put in a lacklustre performance which is stemming from concerns among investors about profitability amid the fast progress its rivals have made.  But Tesla has an excellent product, and if production can be ramped up at pace, the horizon for more attractive per-unit costs looks promising. So, while Elon Musk has his work cut out, expect a fresh round of fighting talk.

As Chinese manufacturers hope to make big inroads into European markets, they risk ending up in a slower lane of sales in the UK. Concerns have risen again about the lack of charging infrastructure on some routes, which threaten to put motorists off switching to electric models. Latest data from the RAC and ZapMap shows that a target for rapid or ultra-rapid chargers at motorway service stations has been missed. Only one in four met the criteria of having six high-powered electric charge points by the end of 2023. Although the number of public charge points has accelerated across the country, there is still work to be done in ensuring the public won’t fret about being left waiting for a plug-in point in the most popular locations.

Related: Tesla’s 2 Million Car Recall Unlikely to Seriously Shift Investor Appetite