China’s BYD overtook electric vehicle giant Tesla in sales for the first time ever in the last quarter of 2023, benefitting from an aggressive price war its US rival started last year, even as it meant smaller profit margins.
BYD handed over 526,409 vehicles in the October-to-December period – mostly in China – beating Tesla’s deliveries of 484,507 EVs.
The Chinese EV-maker’s sales win suggests car buyers are looking for cheaper models in a high-interest-rate economy.
BYD’s deliveries show price cuts are working for the Warren Buffett-backed company, said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“The fight will hurt margins for both companies, but BYD clearly believes it’s a price worth paying to increase market share and recognition,” she added.
Tesla increased discounts and offered incentives like six months of free fast charging if customers took deliveries by December-end.
That push helped Tesla deliver a record number of electric vehicles in the quarter, beating market estimates.
On Wednesday, China Passenger Car Association (CPCA) data showed Tesla sold 94,139 China-made EVs in December, up 68.7% from a year earlier.
The carmaker also remains ahead of BYD in sales of fully electric vehicles for the whole year. Tesla delivered 1.81 million EVs through the year – just short of CEO Elon Musk’s ambitious 2 million annual internal target – while its Chinese rival delivered 1.57 million EVs.
At the same time, BYD delivered a total of 3.02 million vehicles for the year, 62% more than 2022.
In a statement, the Chinese carmaker called itself the “world champion” for “new energy vehicles”, according to a report by the Financial Times.
Meanwhile, dealers with knowledge of the matter said BYD will hand out rewards totalling billions of yuan to its Chinese dealers who hit sales targets in 2023.
The automaker will pay 666 yuan ($93.17) per car to qualifying dealers, the people said. The number 666 is considered an auspicious figure in China since the number sounds like the word for “cool” or “amazing”.
In total, BYD is estimated to pay up to 2 billion yuan as it sold more than 3 million units of pure electric cars and plug-in hybrids in the year, they added.
Chinese media outlet Yicai first reported BYD’s dealer bonus on Tuesday.
The move is part of BYD’s push to rapidly expand its sales network in China via dealerships. The carmaker is looking to boost sales, especially in lower-tier Chinese cities.
BYD had more than 3,400 stores in China selling its Dynasty and Ocean series of cars as of October, the highest among all brands, according to China Merchants Bank International.
- Reuters, with additional inputs from Vishakha Saxena