- BYD has just scored another big win in its fight to overtake Elon Musk.
- The Chinese electric vehicle maker’s quarterly revenue surpassed Tesla’s for the first time.
- BYD is reaping the benefits of its lineup of affordable electric and hybrid vehicles and eyeing global expansion.
BYD has just scored another victory in its battle to overtake Tesla.
The Chinese EV giant said Wednesday in its third-quarter earnings that it had surpassed Tesla’s revenue from EV sales for the first time.
BYD recorded revenue of 201.1 billion yuan ($28.2 billion) in the three months to Sept. 30, up 24% from the same quarter last year. Tesla posted sales of $25.2 billion during the same period.
It’s another marker for the industry juggernaut, which has seized on China’s EV boom to become one of the country’s biggest automakers.
BYD narrowly overtook Tesla as the world’s biggest EV maker late last year, and after a record quarter, aims to put Elon Musk’s company under further pressure.
Here are five reasons why BYD is thriving:
1. Affordable EVs
BYD is known for its inexpensive electric vehicles and has spent this year making them cheaper.
The automaker launched a wave of price cuts earlier this year, which included slashing the price of the ultra-cheap Seagull hatchback to under $10,000.
Those price cuts gave BYD an advantage over Tesla, whose cheapest vehicle in China is the 231,900 yuan ($32,600) Model 3, and appear to have boosted sales.
BYD announced record monthly deliveries on Friday, with the company selling half a million passenger vehicles in October.
2. Luxury vehicles
In addition to making their cheapest cars cheaper, BYD has expanded into luxury vehicles.
BYD unveiled its first supercar, the Yangwang U9, in February. Costfoto/NurPhoto via Getty Images
The automaker launched the Yangwang U8, a $150,000 premium SUV that comes with an on-board drone last year.
BYD also unveiled its first supercar, the 1.68 million yuan ($235,000) Yangwang U9, in February.
The expansion of domestic automakers into China’s premium market has put pressure on European giants such as Mercedes and BMW. Experts told BI that this would allow firms like BYD to target less price-sensitive customers and grow beyond China’s brutally competitive mass market.
3. Global expansion
BYD has launched an ambitious expansion drive this year to boost sales outside China. Executives have said they want half of BYD’s sales to come from abroad in the future.
Although US and European tariffs on Chinese electric vehicles make sales in these regions problematic, BYD is rapidly setting up factories around the world to cut costs and avoid trade barriers. It is also focusing on emerging markets such as Mexico and Brazil.
4. Hybrids
A key part of BYD’s success is its hybrid range. Unlike its rival, Tesla, BYD also offers a selection of hybrid vehicles, which are popular in China.
About 311,000 of BYD’s 500,000 passenger vehicles sold in October were hybrids, with hybrid sales up 62% year-over-year.
BYD’s hybrid lineup includes the Seal sedan. JADE GAO/AFP via Getty Images
BYD has sold nearly two million hybrid vehicles this year. The automaker says its latest hybrids can go up to 1,250 miles without stopping for gas or charging.
Dylan Khoo, an analyst at technology intelligence firm ABI Research, told BI that the core of BYD’s success this quarter stemmed from sales of plug-in hybrid electric vehicles (PHEVs) in China.
“The newly launched models based on BYD’s fifth-generation DM-i PHEV technology have been huge sales successes,” he said.
5. Vertically integrated supply chains
The crux of BYD’s success—and part of the reason it can make EVs so cheaply—is that it tries to make almost every component in-house.
BYD makes its own batteries and computer chips. BYD executive vice president Stella Li recently told MotorTrend that BYD manufactures every component of its Dolphin electric hatchback except tires and windows.
BYD America boss Stella Li. Axel Schmidt/Getty Images
“BYD’s high degree of vertical integration – doing more than buying many key strategic components – means it can control battery and chip production and can do so at very low cost,” said David Bailey, professor of business economics at the University of Birmingham.
BYD did not respond to a request for comment from BI.