Tesla (TSLA) distributed more electric vehicles (EVs) than expected in the fourth quarter of 2023 but relinquished its title as the world’s largest EV company to Chinese rival BYD (BYDDF).
In October to December, Tesla provided 484,507 units, 0.28% above the market consensus of 483,173 deliveries. BYD posted record sales of 526,409 fully electric cars in the same period, 8.65% more than its Austin-based competitor.
However, the Elon Musk-owned EV giant remained the global leader annually, selling over 1.80 million of the 1.85 million vehicles it produced in 2023. On the other hand, its Shenzhen-headquartered contender sold slightly below 1.60 million units.
The two EV manufacturers went head-to-head last year, offering several price cuts to make their models more appealing. Both companies’ margins suffered from the discount battle, although BYD demonstrated its determination to pay the price.
Analysts expect China’s top automaker to continue slashing prices this 2024 to further chip away from Tesla’s market share. That signals growing competitiveness in an industry once monopolized by Elon Musk’s flagship business.
In addition, domestic automakers, including Ford and General Motors, faced new challenges that may alter their plans to expand production capacity. Federal safety regulators ramped up scrutiny of self-driving technology, demanding the installation of new safeguards.
The move led Tesla to recall over 2.00 million automobiles last month to apply fixes and enhancements to its Autopilot advanced driver-assistance system (ADAS).
BYD Overtakes Tesla Amid Surging EV Demand
Industry experts said BYD’s momentum would continue in 2024 if it sustains its price cuts. Tesla may struggle to offer similar discounts since the Inflation Reduction Act (IRA) tax incentives have ended.
Without federal tax credits of up to $7,500, the Texas-based automaker might need to cut prices for its popular Model 3. With its current manufacturer’s suggested retail price (MSRP) of $61,900, Model 3 may fall behind the BYD Seal, which is 19.40% cheaper at $49,888.
Following BYD’s example, other global EV makers may focus on offering cheaper but similar performance counterparts to Tesla’s best-selling models. Market watchers anticipate more challengers to emerge as an increasing number of consumers plan to switch to EVs.
S&P Global predicts the global demand for battery electric vehicles (BEVs) to reach 13.30 million units in 2024. The figure translates to a 39.50% year-over-year (YoY) increase compared to last year.
