BYD is giving Tesla a tough time in China. The implication is that Tesla will lose China and could also struggle to hold its global position as the Chinese automaker continues to advance: “China’s top electric vehicle company BYD has not only overtaken Tesla in sales there, but is close to surpassing it worldwide.” The dominance of China in the EV market is evident, and if Tesla cannot hold these Chinese brands, what that means is that the future of automobiles, at least in the EV space, could belong to China, globally.
Tesla isn’t saying why it’s a no-show at this year’s main industry event for EVs in China. The world’s leading electric vehicle maker hasn’t introduced a new model there since 2021, The Wall Street Journal notes. But it’s also facing intense competition from local manufacturers: Last year, 107 new electric or plug-in hybrid models launched in China, pushing Tesla’s market share down to 10% from 14% in 2020. Meanwhile, the Texas-based company is shifting gears to making more EVs in Mexico to ensure they qualify for customer tax credits under the Inflation Reduction Act.
Tesla fights with price cuts; this user explains. And even price cuts are not helping the market share in China.
Is Tesla cutting prices to fight a “price war”? Musk denies and reveals why
Musk further explained: “Many wealthy critics don’t understand that mass demand is constrained by affordability. There is a lot of demand for our product, but if the price is more than people have money, then that demand doesn’t matter. “
This month, Tesla set off a wave of price cuts around the world, sparking speculation about a price war:
On April 7, Tesla cut prices in the United States. Model 3/Y cut prices by $1,000 and $2,000 respectively, while Model S/X cut prices by $5,000. The overall drop was between 2% and 6%. Tesla also officially launched the low-priced Model Y model in the United States, starting at $49,990.
On the 12th, Tesla announced in Hong Kong, China that the price of the Model 3 high-performance version and long-range version were cut by more than 10%. On the 14th, Tesla Denmark reduced the price of the Model 3/Y high-performance version by more than 9%.
However, in the global market, Tesla currently has the lowest price in China. Taking the rear-wheel drive version of the Model 3 that has attracted the most attention as an example, the domestic price starts at 229,000 yuan, the lowest in the world.
Indeed, BYD is so good that Warren Buffet’s company which invested in it is smiling.
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Berkshire Hathaway chairman Charlie Munger says that Tesla is far behind BYD in the Chinese auto market, as stated during a virtual meeting in recent weeks that was covered by CNBC. Munger considered the answer easy when he was asked whether he preferred BYD or Tesla as an investment.
“I have never helped do anything at Berkshire [Hathaway] that was as good as BYD and I only did it once,” Munger said on a meeting call in recent weeks. “Tesla last year reduced its prices in China twice. BYD increased its prices. We are direct competitors. BYD is so much ahead of Tesla in China … it’s almost ridiculous,” Munger later added.
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