If you’re in the US, and you think about electric vehicles, the first name that comes to mind is almost certainly Tesla Inc. But over the last year or so, people are waking up to the fact that China is becoming an EV export powerhouse.
In fact, in 2022, BYD Co. sold more vehicles than Tesla did globally. It’s not a perfect comparison as Tesla is all EVs, whereas BYD sells both EVs and plug-in hybrid electrics. Nonetheless, these companies are now the two biggest players in a space that numerous automakers are chasing.
In the latest episode of the Odd Lots podcast, BloombergNEF analyst Corey Cantor explains BYD’s success in the booming market, and why it may now be vulnerable to pushback as competing markets ramp up their own investments in the strategically-important fields of EVs and battery making. Last month, India blocked BYD’s proposal to build a $1 billion electric-vehicle plant in partnership with a local company. Meanwhile, the Biden administration has announced billions of dollars in investment and other support measures for America’s EV and battery industries.
“BYD has been moving really fast and operating under the radar,” Cantor says. “Now people are paying attention.”
Here are five charts from Cantor that show the race between the two companies, the overall global picture for EVs, and the intense competition now taking place in the market for the cost-competitive crown in battery technology.
Last year, BYD leapfrogged Tesla to become the biggest EV maker in the world with over 1.85 million electric cars sold. That’s a stunning increase from the 200,000 sold in 2019.
However, as Cantor notes, it’s not exactly an apples-to-apples comparison. Most of BYD’s EVs are plug-in hybrids while Tesla remains the biggest seller of battery-powered electric vehicles, with 1.3 million sold in 2022.
The two carmakers are fighting over a booming global market that saw 10.5 million new EV sales in 2022. But China is the biggest slice as a percentage of new passenger vehicles, chalking up nearly 6.1 million passenger EV sales for the year and giving scale to players like BYD.
In addition to dominating on unit growth and sales, China is also leading the way in battery tech, with its domestic players driving a relentless decrease in their cost. While the average price of lithium-iron batteries did tick-up for the first time last year, according to BNEF figures, China’s “decades of accumulated battery knowledge” has allowed companies like BYD to be extremely competitive in keeping them down, Cantor says.
At the same time that BYD has been ramping up production, there’s been a boom in EV and battery investment in the US, in part catalyzed by the Inflation Reduction Act. This high level, publicly-subsidized investment is an attempt to match China’s nurturing of its own domestic EV industry, which includes measures like offering direct financial incentives to EV makers for each unit sold.
Per Cantor, one of the things US companies are realizing is that they have to take batteries more seriously. “I think for too long many automakers have steered away from the battery portion, just as they have from charging,” he says. “And so I think that's the big lesson, the takeaway: China invested on the battery side and the auto companies are understanding that that's key to the core EV product.”
BYD and Tesla aren’t the only ones making EVs, of course. And in China, the domestic Chinese market is still highly competitive with the number of companies producing EVs having dropped to about 100 registered companies from 500 firms back in 2019.
“When I talk to folks here in the US, Tesla really is far and away the leader,” Cantor says. “In China, you have everyone and not just, you know, new automakers like NIO who are out there selling EVs. But even GM has this really small mini-joint venture car that sells hundreds of thousands of units.”