For many, when you think of electric cars, Tesla is the first to come to mind and has enjoyed dominance in the sector that other carmakers have been trying to shake. However, a Chinese rival has now succeeded in doing just that. BYD, a Shenzhen-based EV giant, sold 526,000 fully electric vehicles compared to Tesla, who sold 484,000 in the last three months of 2023.
This is the first time a company has outpaced Elon Musk’s monopoly. BYD, which stands for Build Your Dreams, manufactures passenger battery electric vehicles and plug-in hybrid electric vehicles, known as new energy vehicles in China. Founded in 2003, BYD’s ascent is a result of China’s yearslong push to build an automotive manufacturing base and position in the global car market.
Last year, China surpassed Japan as the world’s biggest automobile exporter. Canalys, a market research firm, expects EVs will have made up around 40 per cent of those exports. Beijing has continued to pour billions of dollars and a range of resources into EV manufacturing, with BYD being at the forefront.
Erica Downs, an expert in Chinese markets at Columbia University’s Center on Global Energy Policy shared that the “government in China went all in on EVs”. Downs also shared how the government knew it wanted to develop the industry, and “they made sure that they had the different building blocks needed for success in place—so there were subsidies to EV manufacturers; there were subsidies to EV buyers; and they’ve been working on making sure there is adequate charging infrastructure.” Both Washington and Brussels fear that an influx of Chinese-made vehicles could strain their domestic markets. Washington has imposed export controls and unveiled new legislation, such as the Inflation Reduction Act, aimed at strengthening domestic capabilities and attracting more manufacturing to U.S shores, to tackle China’s technological advancement in sectors such as semiconductors and artificial intelligence.
Washington has also begun hiking up tariffs on Chinese EVs, facing a 25 per cent tariff. “There’s a real concern in the United States about having Chinese EVs come into the market and dominate and put domestic producers at a disadvantage” Downs said. Fears have also been growing throughout the European Union, which launched an investigation into Chinese EV subsidies last autumn as concerns grew over Beijing’s EV ambitions. Across the last three years, Beijing’s global EV exports have increased by 851 per cent.
The ongoing probe in Brussels could lead to additional tariffs on Chinese exports. With China being the world’s largest automotive market, Beijing has a key advantage. The country’s domestic production is projected to rise to 35 million vehicles by 2025, according to the U.S.
Commerce Department. Tesla has spent billions of dollars building a ‘gigafactory’ in Shanghai, where it produced more than half of its cars in 2022. Both Volkswagen and Volvo have also made investments and entered joint ventures with Chinese counterparts, helping China enhance its own car-making chops.
As Xiaomeng Lu, a director in the Eurasia Group’s geotechnology practice said: “It just defies logic for them not to be there, and I think that’s why this particular sector is kind of the glue among the European companies, American companies, and the Chinese market.”