If you ask the average American or European consumer to name an Electric Vehicle (EV) brand, most will probably quickly say “Tesla.” A large quantity of Tesla EVs on the road and widespread public charging stations make it hard not to take notice of the EV juggernaut. However, Tesla’s global dominance is threatened by a company few Americans and Europeans would know—BYD.
Tesla’s original vehicle sales forecast for the year 2023 was 2 million. However, by October, Tesla executives conceded that this goal would not be possible, revising it down to 1.8 million. While this revised goal was met by the end of the year and marked a new sales record for the household EV brand, it’s clear that Chinese Original Equipment Manufacturer (OEM) BYD is overtaking Tesla’s EV market share.
BYD delivered more than 3 million passenger New Energy Vehicles (NEVs) in 2023, spurred by the fact that the company sells Plug-In Hybrid Electric Vehicles (PHEVs) in addition to Battery Electric Vehicles (BEVs). Despite its global presence, Tesla’s shipment potential is hindered by only selling fully electric vehicles, mostly at premium prices. Moreover, BYD has several advantages over Tesla and other automotive OEMs that help the company lead the EV market.
Key Highlights
In the video below, I sit down with ABI Research Senior Manager, PR & Media Relations, Deborah Petrara, to discuss the heated contention between BYD and Tesla.
BYD is a Shenzhen, China-based multinational conglomerate founded in 1995 by Wang Chuanfu. The company’s origins began with battery design and manufacturing, setting it up for its EV ambitions starting in 2008.
BYD’s first PHEV, the BYD F3DM, was released in 2008, igniting the beginning of a new era for the firm. In 2009, it began production of the BYD e6, which was released in 2011. While Elon Musk originally scoffed at the idea of BYD representing a threat to Tesla, destiny has determined BYD to be a premiere EV brand in China. But now, the company has its crosshairs on new regional markets in which Tesla has a firm foothold.
The dawn of EV adoption has already passed, with the market transitioning toward mass adoption due to government mandates and consumer demand for eco-friendly vehicles. Early adopters of EVs were enthusiasts seeking fully electric cars despite premium price points. This made American OEM Tesla the go-to option, with strong brand recognition and reliability in Western markets.
However, the narrative has changed, and today’s average EV buyer wants to “go electric” at a cost-friendly entry point. While Telsa has plans for the US$25,000, mass-produced “Model 2,” this vision has yet to come to fruition. This is where BYD has seized a significant opportunity.
To date, Tesla and BYD have focused on very different kinds of consumers. The former has prioritized EV innovations to attract premium consumers who appreciate a luxury feel to their cars. On the other hand, BYD has primarily catered to consumers who want a safe and reliable EV at a reasonable price. This difference in target markets has naturally given BYD the advantage of having greater appeal to the mass market.
In China, consumers are generally more price sensitive, making the cheaper—yet reliable—cars that BYD offers an attractive option. Tesla only sells two mass-market EVs in China—the sedan Model 3 and the Sport Utility Vehicle (SUV) Model Y. At the same time, BYD offers BEV models such as the Dolphin, Seagull, and Yuan Plus (also known as the Atto 3). As Table 1 shows, BYD’s cars are much cheaper than Tesla’s “mass-market” models, making EV adoption far more affordable for consumers who don’t care about all the bells and whistles.
Table 1: Tesla versus BYD Mass Market EV Model Starting Prices in China
| Tesla |
BYD |
| Sedan Model 3: CNY261,400 |
Dolphin: CNY116,800 |
| SUV Model Y: CNY266,400 |
Seagull: CNY73,800 |
| - |
Yuan Plus: CNY135,800 |
Although BYD’s sales are overwhelmingly to Chinese consumers, the company is shifting focus to new markets, such as Israel, Thailand, Australia, and New Zealand. BYD is flexing its muscles by even targeting the European market, where Tesla generates almost a fifth of its total sales. BYD’s low-cost vehicle designs with wide ranges fill a niche that Tesla currently cannot compete with.
BYD is also aiming to undercut sales from major OEMs such as Stellantis. Compared to the Peugeot e-208, which is €35,000 and has a range of 362 Kilometers (km), the BYD Dolphin starts at roughly €30,000 with a range of 427 km.
Making matters worse for Tesla and European OEMs (Lexus, Audi, and Maserati), BYD offers higher-end models as well, such as the Tang, Denza, Yangwang, and Fangchengbao. Having a diverse portfolio of EVs will be key to BYD’s goal of shipping 800,000 vehicles in Europe annually by 2030.
While BYD is signaling a clear expansion to new regions, the company has no plans to target North American consumers yet. For the foreseeable future, Tesla will remain the EV market leader in the region.
Related Content
BYD holds a few major advantages over other EV manufacturers, allowing the company to reduce production costs and offer lower-priced models. These production costs are the typical bottleneck for OEMs that wish to manufacture mid-range and low-end EVs. Below are the advantages that BYD possesses over the rest of the market:
BYD has established itself as a unique player in the EV market, having very little reliance on supply chain partners. BYD and Tesla both remain highly profitable, but the potential for BYD to disrupt the industry is immense. The Chinese automotive giant is starting to enter Tesla’s turf, which will surely spark a fierce head-to-head battle throughout the next decade. Tesla will have to produce new models to compete in its historically dominant markets and remain competitive in China—where the company generates 36% of its EV sales.
For the rest of the automotive industry, reaching BYD’s level of supply chain control is unlikely or even detrimental to business outcomes. However, OEMs should tighten their ties with battery suppliers or develop in-house battery production. Such moves will ultimately go hand-in-hand with reduced EV manufacturing costs.
This article was published under ABI Research’s Electric Vehicles Research Service, which provides technology analysis reports, market data forecasts, analyst insights, and other content for automotive industry players looking to assess the latest EV technology trends.