The all-electric version of the BYD sedan positions itself as a direct rival to the Model 3, responsible for just over a quarter of Tesla’s global sales.
BYD SEal came out in 2022.
BYD Seagull came out in 2023
BYD Dolphin came out in 2021
BYD sales are booming.
Tallying up its year-end sales, it’s a massive 62% growth from 2022. BYD tripled its profits to $1.5 billion in the first half of last year, according to Car News China .
Tesla reduces production at Shanghi plant.
The EU last fall begain a China EV subsidy probe to determine how much of a tariff would be imposed on China EVs. I believe the current tariff is 10%
China’s share of of EV sold sold in EU has gone from 1% in 2020 to 5% in 2023. And is estimated to grow to 15% by 2025.
The US currently has a 25% tariff on China EVs.
Chinese consumers have a choice of 235 different EV models. The US consumer has 50 EV models from which to choose.
Obviously the EU & US fear a devastation of their auto industries.
But access to low cost EVs could lead to mass adoption of EV for transportation causing a great reduction of global warming and emissions.
Of course that choice will not occur within the USA as auto lobbyists will pour cash into Congress to stop/slow the importation of China EVs by tariff perhaps even raising the tariff.
I can envision the campaign of agin cheap China EVs. They pose a threat to US National Security! Just think of the data that those China EVs will be collecting to send to Xi!
I was considering a Prologue, Z-DX or Mach-E next year. But I wonder if the smart move would be to lease one, not buy one, to preserve a final value just in case.
What you won’t find are any articles claiming the BYD’s low cost EVs are profitable. They probably aren’t. AFAIK, the only car company that we know can make and sell full BEVs profitably based on official financial records is Tesla.
That’s in China. The base Seal is selling for $45,000 USD in Germany. Wouldn’t surprise me if BYD and other China manufacturers are selling their BEVs at a loss in China.
Certainly concerning, but it may not be a bad idea for Tesla to reduce its participation in the China price war and let BYD bear the margin costs of driving more Chinese car companies out of business for the near future. Chinese EV makers in bankruptcy crisis
I think one reason Chinese BEVs are priced so low in China is that I suspect they don’t meet western safety and crash standards. Some Chinese export models do pass the standards, but these are all selling in Europe at Tesla prices or higher. I am not convinced that even BYD can build an equivalent BEV cheaper than Tesla.
Could be. Certainly razor thin margin. But the BYD entire mix of the EVs are profitable.
Yet BYD still “tripled its profits to $1.5 billion in the first half of last year” in 2023[from link in OP]. And 2 months into 2024 may not reflect how 2024 sales will eventually turn out.
BYD is charging what the market will bear. A good business practice.
BYD could be selling some models at a loss but overall they are very profitable.
Uncle Warren still has a sizable investment in BYD even he sold quite a bit in 2023. WE don’t know why. US-China economic war? Locking in his large capital gain? His estimation that that the future of EV profitability has lowered? His estimation that the EV momentum is permanently slowed.
But why reduce production at the location that likely has the lowest production costs due to low labor cost? Does not make sense to me.
“Made in China” is the problem when those vehicles are exported to countries trying to expand local production of competing vehicles. So the importing countries impose a countervailing duty on the “cheap” cars imported, thus making the price at least the same as locally produced, or MORE to encourage customers into “buying local”. So the low production cost is irrelevant when the selling price to the consumer is the same/more as a locally-made product.
I think not as Tesla is importing large numbers of EV made in Shanghi is 2022. Elon must have made the calculation that even with shipping cost that a China made Tesla provided more lift to the bottom line than a US made Tesla.
BMW is also importing a China made model from it Shenyang factory.
A German VW has imported China made VWs to Germany sell. VW has sued him as it would uncut German dealers.
The US has a 27.5% tariff. 2.5% importation tariff and a 25% tariff because it is from China. Perhaps an insurmountably barrier. US auto makers are currently pushing to make the tariff higher.
The EU has a lower tariff 10% but that is offset by the EV subsidy there. Of course that could change.
Australia has zero tariff on imported EVS.
Not in Europe. There is little demand for BYD in Europe. In Jan-Feb 2024 BYD has sold fewer than 3,000 vehicles in all of Europe. A lot of hype around BYD, but it actually hasn’t demonstrated that it can sell their cars in Europe. Its only shot at the moment is to go cheap, but then there go the profit margins.
Imagine what might happen if the EU imposes retroactive tariffs.
As I said, there is reason for concern. My guess is that Tesla has decided that it cannot win this price war in China, particularly with so many companies in China (like BYD) that mostly sell at the lower price ranges and are supported by government subsidies. Tesla is also planning to end incentives and raise prices in China starting April 1. It looks like it will let BYD “race to the bottom” and instead focus on margins, at least until the dust clears a bit in China. Just my guess.
True - they’re mostly exporting to non-European countries at the moment. Their export volume is so huge that they acquired their own international shipping vessel. Apparently they exported more vehicles from China than Tesla in Q4 last year as well:
They may have some resistance moving into Europe and the U.S…but they’ll be pushing hard into most other global car markets.
According to annual figures released today, BYD reported an 18.6% rise in fourth-quarter profit, its slowest since the first quarter of 2022, reports Reuters, likely due to the price war that started heating up late last year.
This year, the automaker has made some aggressive price cuts in China, slashing prices on its range to lure drivers from gas-powered cars to EVs. Its marketing slogan is that “new era of electricity is cheaper than oil.”
BYD has cut prices on more than 100 of its existing models since the end of last year, while also relaunching new 70 model trims with reduced prices. The Seagull hatchback, for example, sells for 69,800 yuan, or less than $10,000, inciting fear across the industry.
BYD has embarked on major China price cuts across much of its lineup, in recent weeks, even as it upgrades technology and launches he $233,500 U9 supercar. Tesla too has cut prices and offered other incentives in China, as well as in other markets, though it’s threatening to up prices soon.
BYD is close to opening its first passenger EV factory outside of China [Hungary] while breaking ground on another, with more to come.
BYD has slashed prices across its low-end and mainstream offerings, usually by more than 10%. It’s leveraging its advantages from lower lithium prices and being a low-cost, vertically integrated automaker, producing its own batteries, motors and many other key components, including many of its chips.
After slashing prices during 2023, Tesla has kept cutting prices in 2024. In January, it cut Model 3 and Model Y prices in China modestly, after some token increases in the fall of 2023. On March 1, Tesla announced big incentives for entry-variant Model 3 and Y vehicles, including insurance subsidies, cheap loan rates and more.
In Europe, Tesla cut Model Y prices noticeably in several countries, amid waning sales and reduced subsidies. On Feb. 12, it raised Model Y prices in some key European markets, though mostly still below where they were before the January cuts.
The Austin plant would have higher labor costs, a key factor in typically low-margin small cars.
Musk says Tesla will strip out costs in the new platform and use “revolutionary” manufacturing technique.
Tesla capacity has increased at its Berlin and Austin plants after significantly expanding its mammoth Shanghai factory last year.
But demand hasn’t kept up with expanded output, even with Tesla slashing prices and curbing production well below capacity.
While BYD is making noise with price cuts, it’s also expanding its premium lineup.
BYD is expanding massively overseas. Thailand has become a big market, but it has entered most of Asia. It’s the No. 1 EV seller in Israel and has entered Europe. BYD is making a big push throughout Latin America, especially Brazil.
Exports are still a small share of sales, but have skyrocketed from almost nothing in mid-2022. Notably, BYD is generally selling EVs overseas at higher prices than at home, boosting margins even after shipping and other related costs.
Meanwhile, BYD reportedly is set to launch a new hybrid system offering substantially longer range.
The price cutting bloodshed continues.
Both BYD & Tesla excel at cutting production costs.
More EV models enter the mix in 2024 by various EV manufacturers.
US domestic automaker keep China at a disadvantage via high 27.5% tariffs. Such tariffs are not imposed by other nations. Thus China EV makers gather momentum in foreign markets.
China’s overall BEV exports rose 70 percent in 2023, reaching $34.1 billion. The European Union (EU) is the largest recipient of Chinese BEV exports, accounting for nearly 40 percent of them. Other European countries (Albania, European Free Trade Association members, North Macedonia, Ukraine, and the United Kingdom) held a 15 percent share of Chinese shipments in the same year.
Which I think is great given the overarching goal of globally eliminating gas powered vehicles. BYD has the low priced models needed today to be successful in emerging markets, which Tesla is still at least a year away from seriously contending in.
I don’t think think the two are in collusion, but I do think it interesting that BYD has said it is not entering the US market anytime soon and is not competing directly with Tesla roughly coincident with Tesla apparently dropping out of the China EV price war by raising China Model Y prices. There is perhaps a tacit understanding that the future auto market is big enough for the two of them and their mutual targets are the OEMs like Toyota and VW.
It is noteworthy that Tesla is using BYD batteries and allowing BYD cars in Australia to fuel up at Tesla superchargers. Not the most cutthroat competition.
I guess, but really they aren’t competing much with each other. Even in China I doubt that either company has significantly impacted the other’s marketshare. They have both grown mostly at the expense of the western OEMs. Both will gain much more globally by competing with Toyota and VW than with each other. Share batteries, share charging stations, share software to outcompete ICEs/hybrids. When global BEV adoption passes 50% then go after each other. By then they may be the equivalent of Samsung and Apple.
Again, that’s the glass half-full scenario. The other interpretation is that Tesla and BYD are competing with each other in China, and BYD’s got the upper hand. In that interpretation, Tesla’s had to throttle back their production below the max capacity of their Chinese facilities because they can’t keep lowering prices to match BYD. Since they have to keep their prices higher, they can’t sell as high of volume, and have to cede marketshare to BYD. It’s the same dynamic that folks were arguing Tesla was doing to incumbent automakers when Tesla was lowering prices to below where they could go.
We won’t find out for a while, until we see Tesla’s sales and production numbers for a few quarters. That should tell us whether Tesla’s still maxing out production for the Chinese market.
US & China EV market space is different.
US:wealthier consumers-love big vehicles-less government interference
China:less wealthy consumers-like compact vehicles-total government control
Thus Tesla first built mid & large sized luxury priced EVs.
China built compact low cost EVs. EVs in China cost less than IC vehicles.
And due to the small size of their EVs smaller battery packs are required reducing the cost of a China EV. Many EVs sold in China are the size of a Mercedes Smart car[1]. BYD and other China manufacturers have now started building mid & large sized EVs.
The high US tariff on China EVs will likely mean the US will be the last nation assaulted by China EV makers.
The price war in China is killing off many smaller China EV makers. This will aid BYD & other well financed EV manufacturers.
Several EV companies are also in financial crises, leaving thousands of buyers unable to access after-sales and software maintenance services.
China’s highest selling electric sedan in 2022 was a miniature car. They are cheap, maneuverable, practical for urban driving, and greener than full-size electric cars.
In January of this Motor Trend looks at a cheapy China EV that is slated to enter the EU market space later this year. If it meets EU safety standards it likely meets US standard me thinks.