China’s BYD is on the verge of surpassing Tesla to claim the title of the world’s leading electric vehicle (EV) maker.
The shift, expected to occur in the current quarter, signifies a monumental moment for the EV market and underscores China’s escalating influence in the global automotive industry.
Once overshadowed by industry giants like Toyota, Volkswagen, and General Motors, Chinese manufacturers, particularly BYD and SAIC Motor, are now making substantial strides.
Read more: 2023: Foreign automakers dominate EV market share in the EU
Having outpaced the United States, South Korea, and Germany, China now contends with Japan for the top spot in global passenger car exports, with a significant portion being electric vehicles.
Bridget McCarthy, Head of China Operations at hedge fund Snow Bull Capital, emphasizes the changing landscape of the auto industry, stating, “It’s no longer about the size and legacy of auto companies; it’s about the speed at which they can innovate and iterate.”
McCarthy highlights BYD’s proactive approach to innovation, positioning the company ahead of its competitors.
The competition between Tesla’s Elon Musk and BYD’s billionaire founder Wang Chuanfu reflects the evolving dynamics in the EV sector.
While Musk has raised concerns about the affordability of Tesla’s EVs due to high interest rates, Wang’s company offers a range of cost-effective models, challenging Tesla’s dominance in the market.
The impending shift in the global EV hierarchy underscores Wang’s vision, set when China was in the nascent stages of developing its electric car industry.
BYD’s success domestically has been unparalleled, but expanding this triumph internationally presents challenges, particularly with potential tariffs from Europe and trade tensions between the U.S. and China.
Wang, often keeping a low profile compared to Musk, delivered a bold statement before the European Union investigated China’s subsidies in the EV industry, asserting that Chinese brands should “demolish the old legends” of the auto world.
Notably, the investor and entrepreneur Warren Buffett recognized BYD’s potential early on, investing $230 million in 2008 for an almost 10% stake in the Chinese automaker.
The value of Berkshire Hathaway’s stake skyrocketed, reaching around $8 billion when the company began reducing its holding.
BYD’s success can be attributed to its strategic positioning as both an automaker and a battery manufacturer.
The company, initially a lithium-ion supplier to Motorola and Nokia, leveraged government support and subsidies to become a major player in the EV market.
Despite BYD’s imminent overtake, Tesla still leads in key financial metrics. However, analysts anticipate a considerable narrowing of these gaps in the coming year, with BYD projected to generate $112 billion in sales compared to Tesla’s $114 billion.
BYD’s founder, Wang Chuanfu, who grew up in poverty, founded the company in 1995 with a loan from a friend.
Today, he is worth $14.8 billion and continues to lead BYD’s global expansion, with expectations for the launch of third-generation EVs in the coming year.
Source: BLOOMBERG
