Tesla versus BYD: How Elon Musk-backed EV maker planning to reclaim pole position

Tesla versus BYD: Tesla- the US-based world’s pure EV manufacturing company is facing stiff competition across the world at a time when almost all economies in the world are making a swift transition towards electric vehicles. BYD, China’s biggest electric vehicle (EV) maker months back dethroned Tesla from the position of the world’s largest EV manufacturer across the world.  

In Q1 of 2024, BYD reported an EV sales decline of 43 per cent compared to the fourth quarter of 2023 when BYD emerged as the world’s biggest EV seller. In an exchange filing to the Shenzen Stock Exchange, BYD said that it has sold 300,114 EVs in the first quarter of this year, down from the record-high quarterly sales of 526,409 units sold in the Q4 of FY24 when it overtook Tesla as the world’s largest EV seller. 

Falling Tesla’s Sales 

Tesla, the trailblazer in the electric vehicle (EV) market, experienced a dramatic drop in quarterly sales, prompting concerns about Elon Musk's leadership and the company's future trajectory. Tesla's first-quarter sales of 387,000 vehicles worldwide represented an 8.5 per cent decline compared to the same period last year, marking the first YoY decrease since the onset of the pandemic in 2020. 

The unexpected decline in sales came as rivals like BYD of China and Kia and Hyundai of South Korea reported increases in EV sales, challenging the notion that slower overall demand for battery-powered vehicles was solely responsible for Tesla's woes.

While Tesla's Model 3 sedan and Model Y SUV initially revolutionised the auto industry, the market dynamics are shifting in ways that may not favour the company. Mainstream consumers, unlike early adopters, may find Tesla's unconventional design, minimalist interiors, and reliance on touchscreen controls off-putting, as noted by Consumer Reports.

Moreover, Tesla's direct sales model and limited showroom presence have resulted in complaints about poor service, potentially giving traditional automakers like Ford and General Motors, with their extensive dealer networks, a competitive edge in the EV market.

The Battle For Slice of China’s EV Pie

China is the largest EV market in the world accounting for 60 per cent of EV sales across the globe and that is why the Chinese market is the most lucrative market for all EV players. BYD is a leading player but Tesla tried to leverage the market by reducing its prices.  

In China, Huawei Technologies is also posing formidable competition in front of BYD and Tesla. Reportedly, Aito, the car brand that uses some software from Huawei Technologies Co., is China's best-selling electric vehicle among EV upstarts for a second straight month, a sign of how far Chinese smartphone makers have come in their endeavour to take on some of the nation's brightest automobile companies. 

Beyond China

Tesla is not only eyeing the Chinese market but with the slowing Chinese economy, Tesla is looking to expand its footprint outside China. Elon Musk, in one of his tweets, said considering India’s massive market Tesla’s entry into India is a natural progression.  “Southeast Asia will undoubtedly be a major place of growth over the coming years in battery storage and electric vehicle adoption,” a senior policy advisor based out of the US said on X.  Tesla has been in talks with the Thailand government to set up a productivity facility in Thailand. Thailand is Southeast Asia’s largest car producer and export. In 2022,  Indonesia’s president Joko Widodo met Elon Musk to attract investment in India. Last year, Tesla invested in China to open a battery storage facility.