BYD and its rivals are crushing Tesla in China — and they're going global
Elon Musk's automaker has come under increasing pressure in the world's largest car market from local EV giant BYD and its rivals, who are now competitive with the Model Y manufacturer on both price and technology.
In January, BYD sold nearly double the number of EVs as Tesla, with the US carmaker's sales slumping by 11% from the previous year.
BYD increased the heat last week with its announcement that "God's Eye" self-driving tech would be offered in nearly all its vehicles, including the $9,500 Seagull. Tesla is still waiting for regulatory approval for its rival FSD system in China.
The most concerning thing about BYD's sales for Tesla — and other Western automakers — is where they're coming from.
BYD sold 66,000 vehicles outside China in January, a record figure that suggests the company's efforts to become a global powerhouse are bearing fruit.
The EV maker, which once received backing from Warren Buffett, beat Toyota to become Singapore's top-selling car brand last month, and overtook Tesla's sales in the UK for the first time.
With BYD's affordable electric and hybrid offerings gaining traction overseas, other Chinese EV players are beginning to follow their lead — a move that analysts and industry execs fear could export the so-called "hypercompetiti on" of China's home market globally.
European offensive
The debut of Chinese EV startup Xpeng in the UK was no ordinary car launch.
Tech executives and delegates from the Chinese embassy swanned through a grand hall within sight of Tower Bridge that was once a historic fish market, munching canapes and mingling around Xpeng's X2 flying car on display alongside its electric sedans and SUVs.
It's a sign of the tech company ethos that Xpeng's executives were keen to highlight as they announced the company's first UK launch: the G6 SUV, priced about £6,000 ($7,500) less than Tesla's Model Y.
The UK is Xpeng's newest market. It has also launched in France, Germany, and Italy in recent months. President Brian Gu said the company plans to expand its presence to more than 60 countries and regions in 2025.
"Our ambition is to be the No. 1 Chinese premium electric vehicle brand overseas," said Gu, adding that he defined "premium" EVs as costing more than $41,000.
For brands like Xpeng, which still records big losses and lags well behind BYD in China's highly competitive EV market, international expansion may be a necessity rather than a luxury.
"The China market is ultra-competitive, so it's going to be really difficult for them to carve out huge market share gains in the short-term because of the price war," Tu Le, managing director of Sino Auto Insights, told Business Insider.
While the UK has not imposed tariffs on Chinese electric vehicles, making it a tempting target for expansion, the European Union followed the US last year in imposing import taxes of up to 35% on EVs made in China.
That has not stopped brands like Nio and Leapmotor, which has a partnership with Jeep-owner Stellantis, from joining BYD and Xpeng in moving into the continent.
Their expansion has put local automakers on notice. Volvo Cars CEO Jim Rowan told BI that he doesn't believe EU tariffs will stop Chinese EV companies from becoming major players in Europe.
The boss of the Swedish carmaker said the influx of Chinese vehicles into Europe, alongside brutal competition in China, will force local automakers to up their game.
"As the non-Chinese brands lose market share in China, they're going to have to find market share somewhere else. That means they're going to become more competitive in their home markets and global markets around the world," Rowan said.
US risks being left behind
One market that China's EV champions are unlikely to target anytime soon is the US, thanks to 100% tariffs on imported Chinese vehicles introduced by the Biden administration .
These import levies mean the US has had to watch as other regions like Europe get access to affordable electric models like the $32,000 BYD Dolphin, and local brands like Renault launch their own mass-market EVs to compete.
The absence of this trend has helped keep US electric vehicle prices high, with customers paying around $8,000 more on average for an EV compared to Europe. This raises fears that US consumers could be cut off from accessing affordable electric models.
"On the current trajectory, the US is going to get cut off. There are 95 countries outside China where you can buy BYD cars, and we can't," said Tu Le.
Legacy US automakers have been slow to shift to electric vehicles, with companies like Ford and General Motors rolling back ambitious EV strategies over the past year.
President Donald Trump has also vowed to remove emissions targets and scrap federal support for electric vehicles, a move that will likely slow the transition to electric vehicles.
Tu Le warned that a lackluster EV industry in the US risked making the American auto industry less globally competitive, hurting the ability of the likes of Ford and General Motors to compete with their Chinese rivals overseas.
"I'm hopeful we can change the culture and bring products to market that are competitive globally, not just in the United States. As things are, it feels like the Detroit two are effectively on their way to becoming single-market companies," he said.
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