In December, BYD proved Warren Buffett’s Berkshire Hathaway’s confidence in the company was not misplaced by recording a huge number of EV sales and solidifying its spot as the leading seller of non-fossil-powered vehicles in the world.
BYD, a car manufacturer based in Shenzhen, China, reported that sales of its all-electric vehicles increased 4% from November to December. With the majority of the sales being in China, BYD saw its sales triple to 1.86 million cars overall last year.
Since March 2022, BYD, which began as a battery manufacturer, has seen its sales increase monthly, setting new records in 10 straight months and dethroning Tesla in the second quarter. The final quarter of 2022 saw Tesla ship 405,278 units globally, missing its quarterly estimate by 6%. Despite an increase in total global deliveries last year to 1.31 million vehicles, accounting for 40% of total sales, Tesla still trails BYD in sales by 29%.
According to Eric Han, the senior manager of Suolei, a Shanghai-based advisory firm, the slowing Chinese economy brought on by the pandemic has resulted in consumers turning away from imported models of foreign brands such as Tesla in favor of less expensive locally produced EVs. This trend benefits BYD since the middle-class consumers in China are favorable toward the mass-produced cars by the company because they perceive the vehicles as good value for their money.
The majority of BYD vehicles range in price from 100,000 to 200,000 yuan ($14,548–$29,096), which is less expensive than Tesla and other competitors, including Xpeng and Nio, whose technologically advanced vehicles are priced above 300,000 yuan ($43,645) per vehicle. Customers in white-collar jobs prefer BYD vehicles because they are inexpensive and allow them to save, said Tian Maowei, sales manager of Yiyou, a Shanghai-based auto service. He added that BYD and plug-in hybrid vehicles are easily sold in their home markets since they are equipped with powerful batteries thought to be just like those being used by the high-priced carmakers. Chinese drivers as well as Tesla have attested to the quality of BYD’s blade lithium batteries.
Even though the China Passenger Car Association predicts that the increase in China’s electric vehicle deliveries might slow down to 30% in 2023 because of the elimination of cash subsidies, China remains the world’s largest market for electric vehicles. Three out of five new vehicles on Chinese roads are expected to be battery powered by the year 2025, a UBS report showed.
Tesla continues to dominate the mainland market for premium electric vehicles.
The fortunes of these two titans could provide some insights into how startups such as Nikola Corporation (NASDAQ: NKLA) can position themselves and the different models they develop for the market.
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