BYD emerges as Tesla’s only real challenger in the global BEV market

Tesla’s global market dominance has been under pressure due to a consistent decline in gross margins, which have fallen every quarter since Q1 2022, hitting a new low in the second quarter of 2024. Despite this, Tesla has managed to maintain its leadership position thanks to an uptick in deliveries in recent months. However, the gap between Tesla and BYD is narrowing.

BYD, which produces both plug-in hybrids and fully electric vehicles, in addition to manufacturing standalone electric vehicle batteries and associated electronics, has significantly increased its market share. Between 2021 and 2023, BYD’s market share grew by ten percentage points, signalling the company’s aggressive expansion in the BEV sector. By the second quarter of 2024, BYD was just 18.000 vehicles shy of matching Tesla’s deliveries, underscoring how closely contested the race has become.

In contrast to Tesla’s higher-priced products, BYD has targeted a more general consumer base with its BEV offerings. This strategic focus could further increase BYD’s appeal, particularly in markets sensitive to price changes. The competitive landscape could shift even more dramatically with the recent announcement by the United States to increase tariffs on Chinese-made cars from 25% to 100%, a policy set to take effect in early August 2024. This move, intended to boost domestic sales, might also exacerbate tensions between the U.S. and China, potentially impacting the global BEV market dynamics.

In 2023, global plugin electric vehicle sales reached 14 million units, with BEVs accounting for 70%, according to EV Volumes. Despite this progress, a significant portion of the automotive market remains dominated by traditional combustion engines, with 84% of all light vehicles sold still running on non-electric fuel sources. China, the world’s largest market and exporter for both hybrids and BEVs, claimed 65% of hybrid sales and 59% of BEV sales globally, highlighting its critical role in the ongoing shift towards electric mobility.

As the competition intensifies, BYD emerges as a real challenger to Tesla’s market share in the BEV sector. With both companies competing for dominance in an increasingly crowded market, the next few quarters will be crucial in determining whether Tesla can maintain its leadership or if BYD will overtake the U.S. automaker to become the new global BEV leader.

Source: Statista