Tesla Loses Ground to Chinese Rival BYD
The concentration of what they do is in mainland China, serving a domestic market where they make lots of different EV models. But the principal difference between BYD and Tesla is that it’s at a lower price point. And one thing that BYD does that’s very
Different from Tesla is that alongside battery electric cars, full plug in battery electric, they also do plug in hybrids where they sell many of them as well. So you’re quite right to point out that in the fourth quarter, the final three months of 2023, BYD sold 526,409 fully
Battery electric cars, most of them in China. Whereas Tesla handed over 484,507 globally. But if you aggregate it over the course of the year, BYD is only bigger than Tesla on an annual basis in 2023, if you include plug in hybrids. But is this still sold more battery electric overall that year?
But is the trend clear? Oh, the trend is clear. And so we knew that this was going to happen going into these fourth quarter deliveries. And, you know, the question more on Tesla’s side is where are they still growing geographically?
And I had Dan Levy of Barclays on the show earlier today saying that, yeah, look, it’s possible you can have Tesla continuing to grow in China because it doesn’t make the lower end of its use price cuts as a lever, particularly in China. But it’s still seen as more of a premium
Product there than BYD. Then the next question is what about those early adopters? If you’re an early adopter and you would like the first to get into an EV and you’ve been in gone, what’s left over on the demand side? I do wonder what about China?
Do they love having Tesla there not only, you know, making vehicles, it’s a higher end product. Give us some backdrop and some history there. Yeah, it’s it’s fair to say that Tesla and indeed Elon Musk directly has kind of had a up and down relationship with China. The Chinese government was incredibly
Supportive for the construction in the first place at the Shanghai plant. 50% of all of Tesla’s vehicles globally are built in China, in Shanghai. So it’s clearly an engine room for that production base and that they were very helpful in financing, things like that. There have been some clashes over data,
The ownership of Tesla vehicles by government officials, for example. But on the whole, it’s clearly an important relationship between the two. The big difference between what’s happening in China and what’s happening here in North America is there are just many, many different EV makers.
There are so many more models out there that you can buy. And as you pointed out at the top of the segment, many of them the average American, would never even have heard of the brand nor the model. And so it’s a more fiercely competitive market with many more players.
Does it tell us anything about how an EV market could unfold here in the U.S., or are we are the big three just too entrenched in American society? Tim, I think I heard you praising your last guests for saying that we don’t know what’s going to happen in 2024, and that’s crushing.
And I think that is the answer for the EV market. There is certainly now a big question mark over demand. In the past, Tesla, as an example, has leaned on the idea that its production was greater than its deliveries because there’s always a mad scramble at the end
Of the quarter where vehicles get coal in transit. But, you know, if you move past that and it’s relevant with Rivian as well, you do come to the point where you ask, is the demand really there? That will be the question for 2024. And in this market in particular, North
America, you will have seen the news over the holidays about the federal tax credit, the number of EV models in this country that are eligible as basically half from two dozen to just 13. And those rules are now determined by
Basically if you want to buy an EV and you want it to be eligible for the full 70 $500 federal tax credit, which is a big incentive. Right, to buy something if 70 $500 off, it depends on the exposure that its
Components have to Chinese ownership. In other words, if your battery has a component that has ownership by a Chinese company greater than 25%, it won’t be eligible for that tax credit. And incentives are really key in this market still.
Though Tesla delivered more vehicles than expected in the fourth quarter, it couldn’t stay ahead of China’s BYD in global electric-car sales. Bloomberg Technology co-host Ed Ludlow breaks down the numbers and outlook for Elon Musk’s EV giant. Ed speaks with Carol Massar and Tim Stenovec on Bloomberg Radio.
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Get more on the Bloomberg Businessweek Podcast
On Apple: http://bit.ly/3IPl60i
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Anywhere: http://bit.ly/42xo9kZ
