China’s leading electric vehicle manufacturer, BYD, increased its market share as the world’s largest auto market experienced its fastest-growing month in 2024. According to estimates from Citi analysts, this positions BYD to surpass its global annual sales target and potentially overtake Ford and Honda in worldwide sales. The company’s success has raised concerns among traditional automakers, who have struggled to keep up with the growing shift toward electric vehicles. In China, EV sales surpassed those of conventional vehicles for the first time last year.
The EV boom has led to an unprecedented level of competition. China’s EV industry accounts for about half the world’s total EV production. That has helped fuel a price war as companies fight for market share and attract consumers.
That’s straining profits, which have declined at many major carmakers in the past few months. The decline in profit has sparked investor concerns that the industry is oversupplied and prices may fall further.
Analysts say BYD’s ability to cut costs gives it an advantage over rivals. Unlike most automakers, which depend on suppliers for components like electric motors and dashboards, BYD makes all the parts that go into its cars. That reduces the money it needs to spend on research and development. It also helps it keep the cost of its vehicles lower than its competitors.
BYD’s Seagull and Dolphin models are the company’s best-selling EVs. Last quarter, it sold 530,000 of them, compared to Tesla’s 485,000. About 47% of BYD’s sales, including exports to Latin America and Southeast Asia, came from abroad. The company is building a factory in Hungary, its first plant outside of China, and has plants in Brazil and Thailand in the works.
A growing number of countries are adopting stricter environmental standards, which has boosted demand for electric vehicles. BYD’s strategy is to make EVs as affordable as possible. It can do so because it designs all aspects of its cars with cost and efficiency in mind, from the body to the electrical system, Woychowski says.
That has frightened rivals, who worry about BYD’s dominance in the global market. European officials are investigating whether Chinese EVs are being unfairly subsidized, and the Biden administration has signaled it could raise tariffs on the imports. BYD’s low margins allow it to make its EVs more competitive, which is helping it expand overseas. However, investors disagree on whether the company can successfully pursue a significant overseas expansion. This is reflected in its stock’s recent tumult.
