Focusing on the sale of cheap electric cars has allowed BYD to attack the larger market
Not only is China already a world leader in manufacturing, but its flagship company, BYD, could surpass Tesla by becoming the world’s first electric car manufacturer. Bloomberg analysts say that overtaking is very likely and will be visible when the fourth quarter data will be published in early January.
Sales of electric cars: the strategy of BYD
Much is in strategy. If Tesla sells today only four car models – the Model S and Model 3 sedans and the Model X and Y SUV – BYD has opted to expand its range. Not only. While the US multinational led by Elon Musk proposes vehicles with prices between 40 and 100 thousand dollars, the Chinese giant looks to a larger market. BYD has focused on the affordability of electric cars, which has helped it to win more customers.
The move of the company is considered more strategic also in the impact on the total transition of mobility. Selling electric cars only to those who can afford it is the flaw that emerges from Tesla’s strategy. An example? The Seagull model, which BYD launched with great fanfare at the Shanghai Auto Show in 2023, costs about 10 thousand dollars. Today it is already the fourth best-selling electric vehicle in China. Song, Qin Plus, Dolphin, Yuan Plus and Han are also among the top 10 best-selling electric vehicles in the country. The only Tesla on that list is Model Y.
The winning approach is to offer vehicles to the market populated by more customers, that is to those with medium-low incomes. To keep prices so low, however, there is a competitive advantage upstream of the supply chain. China dominates the market for the extraction, processing and distribution of minerals needed for lithium batteries. These make up 30-50% of the cost of an electric vehicle. Control of the global supply chain has allowed Beijing to topple the charts. And it has not yet attacked the Western market. In 2022, however, it succeeded in eliminating the 11-year-old subsidies for electric vehicles without affecting sales.
