Chinese automotive company BYD has this week revealed figures for 2023, showing that it sold more electric vehicles than Elon Musk’s Tesla in the final quarter.
BYD reported record sales of 526,000 battery-only vehicles, in comparison to Tesla’s 484,000 during the fourth quarter. This marks the first quarter that battery-only sales have outshone Tesla.
It comes as yet more frustrating news for Musk’s company, following demand for its cars slowing, as well as last month’s reports that over two million models were to be recalled due to autopilot safety concerns.
Better Than Expected, But Not Quite Enough
Tesla’s success last year is somewhat of a mixed bag.
It reported that the 484,000 electric vehicles delivered in the last three months of 2023 were a record, and that across the year it sold 1.8 million total. Compared to BYD’s total of 1.5 million, this makes Tesla the top seller for 2023 as a whole.
However, the fourth quarter is where the bad news comes in, as it’s the first time battery-only sales have dwarfed the company.
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Last January, Musk stated that Tesla had the potential to achieve two million deliveries in 2023. The company fell short of this with demand for cars grinding to a halt thanks to a rise in borrowing costs. Slashing prices to entice consumers didn’t help either.
Coming in second isn’t the key takeaway from these figures though, as Tesla’s end-of-year performance is still better than analysts predicted. Sales picked up pace from early 2023 and increased 20% from the same period in 2022.
According to Dan Ives, Analyst for Wedbush Securities, this last quarter can still be counted as a “clear win” for Tesla.
BYD Achieves New Milestone
Founded in 1995, the Shenzhen-based, Warren Buffet-backed company started life as a manufacturer of rechargeable batteries. Having achieved success largely just on home turf, its sights are now firmly set on US, European, Japanese, and Korean markets.
The company is hoping to capitalize on its ability to create cheaper, smarter vehicles that adhere to fast-changing consumer preferences. A move that legacy automotive manufacturers are currently struggling with.
In a statement published in China, BYD called itself the “world champion” for “new energy vehicles.” This, and its new milestone, has clearly set up its intentions and shown Tesla that it can compete in a major way.
“As BYD has accelerated into the fast lane, it's fresh evidence of just how competitive the EV market has become and how hard it will be for Tesla to swerve back to head the pack.” – Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown
How Will 2024 Play Out?
BYD’s heritage in batteries is the current secret to its success. Batteries are one of the most expensive parts of an EV and, while most manufacturers use third-party suppliers, making them in house allows BYD to slash production process costs. This gave it the opportunity to cut prices at the end of 2023, boosting sales by 70% in December alone and putting them in the top spot.
“Tesla relies on several suppliers and has flagged shortages of lithium as demand ratchets up as a supply chain obstacle in the years to come.” – Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown
However, last month the Wall Street Journal reported that the US government was looking at raising tariffs on some Chinese goods to bolster the US clean energy sector. This would include electric vehicles.
Whether in-house manufacturing costs will offset the potential tariffs remains to be seen, but this will no doubt add fuel to Musk’s fire to get back to that top spot.