China’s BYD outsells Tesla – and why it will stay that way | DW News
Will 2024 be the year when Chinese and other Asian electric vehicles conquer Europe and the US China’s biggest EV maker just overtook Tesla in terms of worldwide sales and Vietnam’s vinfast is opening its first dealerships in the US so to discuss how we’ve got here and
What it all means I’m joined by Peter finle from technology consultancy Cap Gemini engineering thanks a lot for being with us Peter the Western electric car market appears to be changing doesn’t it absolutely first of all thanks for having me Rob yes uh the Western European car markets they are indeed
Changing yeah so over the past years those Market they were a growth Market starting from small numbers yeah they were fueled by subsidies and uh attracting to uh higher end buyers and now uh as electric vehicles are about to hit the mainstream the main Market yeah
We also see that uh subsidies get cut down right uh and in the next year we need to see see how consumers with all their headwinds they are facing for their for their sentiment yeah let’s speak about uh crisis around saving options and so on uh how they will adopt
Further adopt electric vehicles yeah and what we’re of course going to see over the next year is where those electric vehicles are coming from so 2023 saw electric vehicle sales surge to new heights of course EVS made up 18% of all car sales worldwide let’s just have a
Look at what were the best sellers around the globe though Tesla’s model Y is actually the market leader over 700,000 were sold between January and August of last year that’s more than double the sales of the number two selling vehicle also from Tesla the model 3 but third and fourth for Global
Sales are both models made by Chinese manufacturer byd and Chinese models also made up much of the rest of the top 10 I can tell you the highest ranked European car is Volkswagon id4 which actually only came in at number eight so all of that data suggests that Tesla is
Globally dominant when it comes to Electric Car Sales however something very interesting happened in the final month of last year in the fourth quarter of 2023 Chinese automaker byd delivered 526,000 n fully electric vehicles thanks to aggressive endof year discounting strategies whereas Tesla reported just 48457 cars sold in the same time period
So it’s a similar amount but Tesla behind byd so the EV Market at the start of 2024 is actually looking rather different to it did at the start of 2023 so let’s bring back in Peter finle from C Gemini engineering how has byd managed to creep up and overtake Tesla on fully electric
Vehicles I think what we see now this is they are harvesting the fruits of a longer term strategy here so uh this is this the the nice figures on the last in the last quarter they’re definitely the result of a good product portfolio and competitive products at nice prices that
And that doesn’t this is not something that happens overnight right so um they are they have invested a lot in their product portfolio in various segments right from higher end to entry level yeah and now they rolling it out to clients and clearly they’re benefiting also for a strong from a strong domestic
Demand they’re also benefiting from over a decade of subsidies for Chinese electric car makers from the government in Beijing so have they got an unfair advantage in that respect that they can sell their cars for less as a result of these subsidies well this is a this is a hot a
Hot a hot debated topic yeah I think what is generally safe to say is that uh Chinese government has provided a very favorable industrial environment for electric whe vehicle makers yeah and a brands of all of all kinds and from um from from from all come from all
Countries they are benefiting from from this positive from this positive environment yeah so and there is a reason why also Western manufacturers uh Manu produce uh some of their electric vehicles in China in order to benefit from the strong supply chain uh the uh competitive manufacturing costs right
And the strong domestic Market but clearly the problem comes when those Chinese cars enter The American or the European market where cars are more expensive locally made cars are more expensive and obviously governments in Europe have made quite clear that they’re concerned about that you’ve got uh France offering subsidies to e
Vehicles uh purchases that don’t cover Chinese vehicles and also osula feline the president of the European commission has been very clear that she thinks chin cars are getting an unfair Advantage meanwhile in the US we’ve heard similar things from from President Biden so could this also be the year when there’s
A backlash against Chinese e Vehicles entering European and US markets and that actually we see a supp a suppression of that I think we need to see what is the outcome of those investigations this is in the hand of the politicians right now and we need to see yes that’s right I
Should have mentioned Brussels is actually carrying out an investigation into these subsidies isn’t it so that’s what that that’s the investigation you’re referring to there but but can Brussels do anything yeah can they do anything to stop I think you’re you’re fully right
Rob so I think but I think we need to we need to we need to see what will come out of that yeah and no matter no matter what we do politically on a tariff level yeah I think it does not release the European industry from providing competitive and strong desirable
Products yeah so uh because that that uh no matter what you do at the border yeah it it doesn’t it doesn’t release you from your duty to provide excellent products yeah and looking forward yeah is I think that Europe is still and will be a very attractive market for for
Automotive compan companies and an important one and I think what we will see in the next years is that uh foreign uh companies yeah for example from China they will start building factories in Europe right and uh also make Europe as a production base not hopefully only for
Assembly but also uh for for components like battery cells and so on and I think this will this will change the game and also level the playing field yeah it’s interesting isn’t it a positive thing yeah because byd I’m just looking through my notes has said that it wants to be producing 800,000
Vehicles a year in Europe by 2030 but if it’s meeting s such resistance from even selling its cars in Europe is it really realistic that it could be producing them here as well based on the the current price regime exactly and I think this is the the question is always what are the
Boundary conditions in order to achieve those sales figures yeah basically I do believe that uh the market Market is ready to accept new and let’s say new brands uh in in in the mix and also uh that consumers will will have an interesting look at those new offerings
So the question is uh how do what is the proper price point yeah so that brand technology perception uh um meets meets the price they ask so uh what is an attractive package and I do think this formula what is the best attractive package uh that uh that lures clients
Into the showrooms and to sign a deal so this is has still to be figured out because at the moment yeah many new entrance especially from China they have a quite premium positioning obviously speaking to you from Berlin and here they’ll be concern about the idea of Chinese electric vehicles being produced
Within Europe because obviously Germany’s car manufacturing sector is you know the jewel in its ground uh is there anything that the likes of Volkswagen and Mercedes-Benz can be doing to prepare themselves for the arrival of yet more Chinese electric vehicles I think the German automotive industry has understood that challenge
And is actively working on to make itself more competitive uh on one hand uh it’s uh goes from from mastering more parts of the value chain speaking of battery sell production so uh many many German or most most German oems they have they have addressed that already proactively right and they are securing
That part of the supply chain uh also they are looking into their development processes how to become faster more efficient or leaner to meet that so-called China speed this is a term that has been used very often in German in the last year and also last but not
Least to bring the overall overall cost down clearly to uh cover gaps in the portfolio like the much discussed uh a battery uh electric entry level Vehicles right the sub 25,000 Euro segment yeah which at the moment it’s very difficult um on with European standards and European cost levels to achieve that to
To to serve that segment profitably China spe that’s a new that’s a new one for me but it’s obviously something that that industry is talking about here in Germany you know exactly what they mean just from the phrase of it things just seem to happen much faster in China than certainly than they
Do here in in Germany let’s also uh if you don’t mind Peter just have a a look at another of the big developments for Asian car makers in the west because it’s not just China Chinese makers that are are trying to crack the West Vietnamese electric car maker vinfast
For example has opened its first dealership in the United States the car lot in North Carolina is the first of 125 that the company wants to open in the US this year one of its first offerings is the vf8 an electric 5 seat SUV starting at $46,000 not cheap some wonder if vinfast
Can make it in the US since the entire EV industry is under price pressure from the likes of Tesla and of course the Chinese manufacturers that we’ve been been talking about so Peter finle vinfast sold just 11,000 vehicles in the first half of 2023 compared to Tesla’s 889 th000 I
Mean can it really reach a point where it’s competing with the big guys I think generally the the the the hurdles for new entrance in the markets they have been they have they have they have they have risen in the past year so on one hand because the big industrial
Giants and also account Tesla now nearly to The Establishment yeah because they produced so many vehicles and they have an an an an an an established uh sales support infrastructure now in the market right so they they are they’re not only producing excellent products yeah so which the new entr are competing against
But also they have a working service sales and support network in place and we have seen in the past that this this disability to U talk with Consumers sell the product service the product that brings spare parts in time and ensure that the the product can be repaired
Yeah this is a large hurdle yeah and consumers uh not really ready yeah to um to to um to uh to make discount in this area yeah so uh for all new entrance now the expectations on a good product are high and also the expectation on good
Service are high and this is something that happens that doesn’t happen overnight so these are huge Investments and take considerable time and we’ve talked about Chinese manufacturers opening Western factories but vinfast is actually building a factory in the US isn’t it are the Americans likely to be rather less concerned about a Vietnamese
Manufacturer than a Chinese one I think this is gener a question of what is the image the brand image of a new entrant and clearly every new entrant has a Heritage yeah from the country it’s coming from from the positioning of its product and also how
It wants to be perceived by by clients and also the price point they’re selling it this is uh this is an important part of the of the mixture yeah speaking of price point actually vinfast is selling in Vietnam so not in the US a $20,000 electric vehicle the dimin
Diminutive even uh vf3 which I think we can show you some pictures of uh could these types of tiny EV actually take off in Europe and in the US I do believe that there is a gap in the market and a need in the market for entrylevel Electric Mobility so we
Always look when we talk about electric vehicles about mid mid-level or luxury segment clearly these are fancy cars but the the reality of many buyers especially in southern Europe is a different one yeah so they rely on affordable entry-level mobility and at the moment yeah this is done via usually
Petrol um uh IC cars yeah and the industry if you really want to take decarbonization seriously the industry need to come up with an offer for affordable entry-level mobility and uh this offer um should not be extremely Frugal because buyers will not accept that so we are talking here from a
Sufficient range his batteries from 35 to 40 kilowatt hours right and that uh should be at the Consumer Price yeah maybe 20 to 25,000 yeah and this is the next one of the next challenges for the oems well let’s talk more broadly uh just about the electric vehicle sector
In general because um I think there is there are questions emerging around it from particularly the big manufacturers for example Toyota chairman Akio Toyota he says that people are finally seeing the reality as he put it uh implying that traditional car makers shouldn’t be focusing so much attention on electric
Cars also Mercedes CFO has warned that not every manufacturer is going to survive the transition to EVS is there growing skepticism among the big traditional car makers I suppose about electric car production in general talk about the future of EVS the discussion always gets very quickly very
Dogmatic yeah I think it is a question of the Horizon you’re talking about yeah in the long run the benefits of electric vehicles here are clear it’s in terms of efficiency it’s in terms of environmental impacts it’s also in terms of cost yeah and already you today you
See that in many many use cases electric vehicles are the better alternative yeah so we all like the combustion engine it has served for over 100 years a wonderful purpose yeah it brought Mobility to the masses and propelled the economy fantastic yeah but now there is
An alternative in place which is in many many cases already better now and will be better the better alternative in even more cases in the future so that’s fine and the question for the industry is how to master that transition because it’s clear and also this is a part of the
Realism we need that not for all cases we talked about entry level uh Mobility we talked about uh long and heavy Hall yeah so battery electric uh propulsion is maybe not there yet so and but it will be and this is the important point so the question is how to master that
Transition and then transition period because you still need to keep earning money this is also clear right so and I think this is this is what we see now and this is by no means uh uh a fundamental skepticism on Electric Mobility as I would perceive it and of
Course there’s the building out of the infrastructure as well which is another hurdle to get over but Peter fintel from Cap Gemini engineering uh thank you so much for joining us and talking through all of this it’s been great to hear your insights thank
You and thanks a lot to you at home for watching there’s plenty more from the DW business team here on the DW news YouTube channel if you want more from us click on one of our other things and I’ll see you over there take care
Chinese carmaker BYD sold more fully electric cars worldwide than Tesla during the final months of 2024. So could 2024 be the year when Chinese EV’s break through in Western markets? With the help of Peter Fintl from Capgemini Engineering, we discuss Washington and Brussels’ attempts to protect their own auto industries and ask how traditional carmakers have been left behind.
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