BYD recently outperformed Tesla, posting greater quarterly revenue for the first time since both started competing in international electric vehicle sales. For the quarter ending in September, China’s top-selling carmaker saw its earnings surge by 24%, recording a total of 201.1 billion yuan (€26.1 billion). Although these figures fell short of predictions, they exceeded Tesla’s sales of $25.2 billion for the same duration.
Net income for BYD rose by 11.5% to a record 11.6 billion yuan, surpassing expectations. This was fuelled by record-breaking sales of 1.12 million electric and plug-in hybrid vehicles, yielding a gross margin of 21.9%. However, Tesla still eclipses BYD in terms of profit, with earnings of $2.2 billion. In the first three quarters, BYD reported a net income of 25.2 billion yuan on a revenue of 502.3 billion yuan.
BYD and Tesla have become key challengers to traditional automakers, as companies like Volkswagen, Ford, Stellantis NV, and General Motors face difficulties making their EV transitions profitable. With demand growth for fully electric cars slowing down, BYD’s robust selection of hybrid vehicles has provided it with more resilience than Tesla.
The prominent role of hybrid vehicles in BYD’s line-up greatly contributed to the revenue boost, with updated powertrains in some models offering over 2,000 kilometers of range. Also giving BYD an upper hand is its end-to-end supply chain, reducing costs and giving it an opportunity for cheaper vehicle production.
On the other hand, Tesla is battling the constraints of a restricted and increasingly dated EV-only catalogue, concentrating more on enhancing the production of its Cybertruck and the popularisation of its partial automation system touted as Full Self-Driving.
Despite Tesla’s dominance in the AI space and fully electric vehicle sales solidifying its position as the planet’s highest-valued carmaker, BYD is now following closely in third place, ahead of VW and Mercedes and the major Detroit-based carmakers.
BYD has additionally gained from revitalised domestic demand in China, driven by increased subsidies at national and local levels. These incentives provided to consumers switching from petrol vehicles to EVs and hybrids have mitigated any overseas backlash to the expansion of Chinese car manufacturers.
This week, the European Union levied higher tariffs of up to 45% on Chinese electric vehicles (EVs), escalating trade clashes between the dominant global exporters. This is why BYD, the Chinese automaker, refrains from selling passenger cars in the American market due to tariff constraints.
In the last quarter, it is expected that BYD’s earnings will strengthen, assisted by its prominent sales position in China – the largest car market worldwide. The final quarter of each year typically sees a surge in purchases, and national government bodies have been mandated to increase EV acquisitions, on top of the existing subsidies.
Moreover, BYD is making steady progress towards achieving its revised yearly sales aim of 4 million vehicles. By the end of September, the company sold roughly 2.74 million vehicles. Citibank Inc. predicts that BYD could potentially sell up to 500,000 units monthly by November.
On Wednesday, BYD’s shares listed on the Hong Kong market dropped by 0.7%, reducing its annual gain to 38%. In contrast, Tesla’s stock has seen a 4.4% increase this year, according to Bloomberg.