China’s BYD closes in on Tesla as sales jump
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China’s BYD is rapidly closing the gap with Tesla in the race to become the world’s best-selling electric vehicle (EV) manufacturer of 2024, reporting a significant increase in sales in December. The Chinese carmaker announced that it sold 207,734 EVs in December alone, bringing its total sales for the year to 1.76 million units. This surge in sales was partly driven by subsidies and discounts, which helped attract customers.
Tesla is expected to release its quarterly sales figures later this week. Although Tesla maintained a narrow lead over BYD in the previous quarter, the Shenzhen-based company has been steadily narrowing the gap. In 2024, BYD’s total vehicle sales jumped by more than 41% year-on-year, fueled primarily by the strong performance of its hybrid models.
BYD has benefited from a strong rise in car sales in China, its home market. Intense competition within the industry has driven down prices, while government subsidies have encouraged consumers to upgrade their vehicles to more fuel-efficient options, including EVs. As a result, BYD sells around 90% of its vehicles in China, where it has steadily increased its market share, surpassing foreign brands such as Volkswagen and Toyota.
The growth of BYD and other Chinese electric car manufacturers stands in stark contrast to the challenges facing some legacy carmakers, especially in Western markets. Honda and Nissan, for example, have recently confirmed merger talks to better compete with China’s growing car industry. Similarly, Volkswagen, another major automaker, reached an agreement with the IG Metall trade union in December to avoid plant closures in Germany and prevent immediate layoffs. Previously, the German automotive giant had warned that it might have to shut down plants to reduce costs.
Meanwhile, in the automotive world, Stellantis, the company behind brands like Vauxhall, Jeep, Fiat, Peugeot, and Chrysler, saw its CEO, Carlos Tavares, step down suddenly in December following a boardroom conflict. This came two months after Stellantis issued a profit warning, adding to the mounting pressure on traditional carmakers facing intense competition from Chinese companies like BYD.
In terms of revenue, BYD surpassed Tesla for the first time in the third quarter of 2024. The company reported revenues of over 200 billion yuan (around $28.2 billion or £21.8 billion) from July to September, marking a 24% year-on-year increase. In comparison, Tesla posted $25.2 billion in revenue during the same period. Despite this achievement, Tesla still managed to outsell BYD in terms of EV units sold.
While Chinese manufacturers like BYD are making significant strides, they have faced difficulties in expanding their presence outside of China. One major challenge has been the imposition of tariffs in key international markets. In October, the European Union introduced tariffs of up to 45.3% on Chinese-made EV imports, creating hurdles for BYD and other Chinese brands looking to enter the European market. Similarly, the United States has implemented a 100% duty on EV imports from China, with expectations that President-elect Donald Trump will introduce further tariffs on Chinese goods.
However, BYD has been making inroads in emerging markets, continuing its push for international expansion. Despite these efforts, the company encountered a setback in Brazil, its largest overseas market, when authorities halted the construction of a BYD factory due to allegations of poor working conditions that were described as comparable to “slavery.” BYD responded by severing ties with the construction company involved and reaffirmed its commitment to comply with Brazilian labor laws and regulations.
Despite these challenges, BYD’s growth continues to pose a formidable challenge to Tesla’s dominance in the global EV market. With strong sales figures and a widening footprint both in China and in emerging economies, BYD is positioning itself as a major competitor to Tesla, which has long held the top spot in global EV sales. However, the global automotive landscape remains competitive, with established car manufacturers working to adapt and meet the growing demand for electric vehicles. As both companies continue to expand their reach, the battle for dominance in the electric vehicle market will undoubtedly intensify in the coming years.
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