Elon Musk is like sitting on a fire: Tesla is about to be surpassed by a Chinese company this year, the “throne” of the world’s largest electric car company will have a new owner

China’s electric car maker BYD is planning to overtake rival Tesla in global electric vehicle sales as soon as this year, Nikkei reported. To do this, they aim to increase production capacity to double sales volume with all car models this year.

“ Our target starts at 3 million units ,” BYD President Wang Chuanfu told an investor conference in Hong Kong last month. However, he added that BYD hopes to double last year’s sales to 3.6 million units. This figure includes export vehicles.

BYD stopped producing gasoline vehicles in March 2022 to focus on new energy lines such as electric vehicles and hybrids. The company did not disclose sales details for this year, but based on 2022 rates, it should be able to sell 1.75 million electric passenger vehicles in 2023, close to its 1.8 million EV target. Tesla.

However, in the first quarter, BYD only sold 260,000 electric vehicles, much lower than Tesla’s 420,000. Tesla achieved this number by reducing car prices in many markets.

BYD aims to catch up with Tesla by expanding output. Its total production capacity reached 2.9 million units last year, Zheshang Securities predicted. The company also said that the Chinese automaker could push production capacity to 4.3 million units this year.

BYD appears to be adding equipment and personnel, to meet its output target of 3.6 million vehicles. The company also expects lower production and procurement costs through economies of scale.

It is not clear if BYD will lower the price of the vehicle, but the cost savings will allow it to spend more on sales promotion.

“ We will become stronger this year. Scaling will give us certain advantages .”

The car company also plans to launch its luxury car brand Yangwang this year. The first model to be launched was the U8 sports line that came with technology such as 4-wheel independent control for increased safety and stability.

Vehicle prices range from 800,000 yuan to 1.5 million yuan ($116,000 to $218,000). BYD will then continue to launch an electric super sports car.

The Chinese manufacturer is targeting the mid-range segment with models ranging from 100,000 to 300,000 yuan. The premium car segment is still new to BYD, but that’s exactly what it needs to compete with Tesla’s Model X SUV.

BYD, which entered the electric vehicle segment in 2003, honed its technological prowess by learning from foreign manufacturers. The company opened its design center in 2019 at its headquarters in Shenzhen and recruits top talent including former Audi designer Wolfgang Egger.

However, BYD seems to face three challenges in their expansion, the first being the fate of government support programs for new energy vehicles. Last year, the company received 10.4 billion yuan for such support.

BYD’s net profit increased 450% last year to 16.6 billion yuan with government subsidies contributing up to 60%. However, the Chinese government ended such subsidies in December.

BYD’s sales network is another matter. If the sales and maintenance personnel associated with the company do not receive good enough training, they may receive complaints that damage the brand.

A Chinese portal that collects customer complaints has found numerous complaints against automakers, including BYD, about how delivery times and test drive registration process.

Entering BYD’s overseas markets into Europe and Asia will be a difficult step. Overseas operations generated less than 3% of total sales last year, which underscores the urgent need to expand its footprint overseas.

In the financial markets, observers are scrutinizing BYD’s growth potential. Credit Suisse said in a report at the end of March that BYD faced severe pressure in the first quarter due to the removal of government subsidies and Tesla’s steep reduction in car prices.

In addition, Warren Buffett’s Berkshire Hathaway – a longtime major shareholder of BYD – has been steadily selling stock since last summer.

” I believe the impact will be small as long as the business and market share expansion goes smoothly ,” Mr. Wang said.

BYD surpassed Volkswagen last year in market capitalization and stood at $99.7 billion at the end of March to rank third among global automakers. The Chinese company is second only to Toyota Motor, which has a market capitalization of $231.2 billion at the end of March, and Tesla is ranked highest, at $656.4 billion.

Source: Nikkei