As per the figures, BYD registered a surge of 62% in sales over 2022. It has also recorded a profit of 1.5 billion just in the first half of last year
Chinese electric car manufacturer BYD bags the top spot for becoming the world’s largest EV company in the last quarter of 2023, dethroning Tesla. The world’s biggest plug-in hybrids and battery electric vehicles announced that it had sold over 3.02 million vehicles last year.
The Shenzhen-based company sold 1.57 million battery EVs and 1.44 plug-in hybrids. Tesla overtook them by selling 1.8 million electric cars around the year. Musk’s Tesla sold 230,000 units more this year, which happens to be drastically lower than the extra 400,000 units sold in 2022.
As per the figures, BYD registered a surge of 62% in sales over 2022. It has also recorded a profit of 1.5 billion just in the first half of last year.
According to the Chinese Association of Automobile Manufacturers, Chinese automobile producers are expected to have sold over 9.4 million EVs and hybrids in 2023. They anticipate this year’s sales to cross 11.5 million.
BYD is backed by billionaire investor Warren Buffet and stands as an example of Beijing’s booming EV industry. The immense government support has hugely benefitted the growth of the industry.
Beijing has a target that at least 2 out of every 10 cars sold annually in 2025 will be new energy vehicles (NEVs), including battery EVs, hybrids, and hydrogen fuel cell vehicles. The government has planned that by 2035, NEVs will become the mainstream of new car sales.
The Chinese Association of Auto Manufacturers released their data that in the first 11 months of 2023, 8.3 million units of new energy vehicles were sold. This accounted for 30% of total car sales.
They have been successful in achieving the first goal three years before the deadline, and if the growth rate stays intact, then the second one may also be achieved sooner than expected.
Miao Wei, former minister of the Ministry of Industry and Information Technology, said a few months back that Beijing’s goal of NEV penetration of 50% by 2035 will likely be achieved by 2025 or late 2026.
Analysts at Natixis Asia, a French investment bank, released a report mentioning that Beijing’s lead role in the global EV industry is based on its domestic market, cheap labour, and supply chain dominance. It is now a leading producer with an increment in comparative edges, exploiting its huge internal market and first-mover advantage.
The first-mover advantage and government support in the form of subsidies and infrastructure development have helped indigenous EV manufacturers dominate domestically and internationally. However, the cut-throat price war in the previous year has imprinted a dent in the profit margins of automakers.
Consumers had huge financial incentives for buying EVs, which expired and existed till 2022; the automakers then started attracting customers by reducing prices. BYD and many other companies introduced multiple rounds of price cuts, further fueling a price war.
The US automaker Tesla started the discounts game last year and also has a factory in Shanghai. In the span of just three months, it reduced its prices for the second time in January 2023.
In November, BYD announced discounts on five models up to 18,000 renminbi ($2,550). Ji Yue, a Chinese EV maker, reduced the prices of all its models by RMB 30,000 ($4,200) in November.
This price war has boosted sales but has pushed the industry into a turmoil of reduced profitability. Till November 2023, the Chinese car market generated a profit margin of just 5%, from 5.7% the previous year and 6.1% in 2021.
BYD is facing exorbitant high tariffs in the US market due to the ongoing trade crisis. Hence, it is focused on the domestic market and is expanding globally, majorly in Europe. It has announced plans to build an assembly plant in Hungary, its first production facility for battery vehicles in Europe.