US car maker Tesla has lost its crown for most sales of all-electric vehicles to Chinese firm BYD, which has capitalized on Beijing’s strong government support for the burgeoning sector. The US-based car manufacturer run by billionaire Elon Musk delivered a record 484,507 vehicles in the fourth quarter of 2023, according to a company filing Tuesday — up more than 11 percent from the previous quarter.
However, more than the jump was insufficient needed to keep the Silicon Valley darling on top of the global list of battery electric vehicle producers and sellers. China’s Shenzhen-based BYD reported a tally of 526,409 sales of EVs over the same period. “BYD’s shock sales increase in the fourth quarter is a clear sign that it has become the new world leader in battery electric vehicle production,” said Neil Saunders, an analyst with research firm GlobalData.
BYD, which started in 1995 as a rechargeable battery manufacturer, now makes a wide range of all-electric and plug-in hybrid cars. It competes against Tesla on price inside China and Europe, where it has a significant presence thanks to a deal with Scottish bus builder Alexander Dennis. It also operates around 30 industrial parks, mainly in China and the US.
While Tesla has yet to establish a foothold in the European market, BYD has carved out a niche in China, where the government has set a goal of EV sales growth of around 300 million in the next decade. China has the potential to eclipse Europe as the largest EV market, but it is likely to be able to achieve its ambitions with significant investments in new factories.
Maintaining a high double-digit vehicle sales rate is vital for Tesla to bolster its market position. Musk has convinced many of his devoted retail investors that the $800 billion megacap carmaker will soon be capable of selling 20 million vehicles per year- 10 times its current capacity.
The challenge facing Tesla is heightened by the fact that the demand for new vehicles remains weak, with real wages falling, consumer confidence at a near-decade low, and record prices at the pump. Analysts expect annual sales to hit 2.17 million this year, an increase of only 20% and far below Musk’s aspirations.
Tesla has slashed prices on its Model 3 and Model Y models to boost sluggish growth. But that has yet to do much to stimulate demand, and the EV industry is struggling to cope with shortages of critical components such as semiconductors. With a slowing economy, it seems increasingly likely that investors are growing tired of waiting for Tesla to produce the kind of vehicles it promised last year when it raised its prices. That could lead to further price cuts in the weeks ahead.
