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BYD Is China’s Largest EV Company
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If Sales Are Bad For BYD, They May Be Bad For Tesla
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BYD Is Larger Than Tesla
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It is hard to imagine how a hot company like BYD could suffer an extraordinary drop in sales. However, in February, it happened. According to the FT. “The world’s biggest electric vehicle maker reported February sales dropped 41 per cent year on year to 190,190. The decline was driven by a 65 per cent drop in domestic sales and came despite export sales surging 50 per cent.”
Some of the drop was attributed to the Lunar New Year celebration. Almost no one thinks that is enough to account for the collapse.
READ: The analyst who called NVIDIA in 2010 just named his top 10 AI stocks
What is the cause, and does that cause tell us anything about Tesla (NASDAQ: TSLA) sales? It depends on how you look at it.
There is cutthroat competition among EV companies in China. No one knows how many there are. Reuters has put the number of brands for sale in China at 129. It is not possible for so many to survive. In the meantime, price cuts are one path to market share. They are also a path to losses. However, in the short term, this is not good for BYD.
BYD probably has to pick up the pace of its new-model releases. The increase in consumer choice should, on paper, help drive more sales. But new models are expensive.
Turning to Tesla, many of the cars it produces at Giga Shanghai are exported. However, they also drive their China business. According to Yahoo, Tesla’s market share in China is 8%. The market share of its Model Y has dropped to 20th among all brands.
China is a problem for Tesla. Its EU sales have dropped by double digits for almost a year. In the meantime, BYD sales there have risen by double digits over the same period.
Tesla’s market share has dropped to about 50% in the US. This could be worse if not for the 100% tariff on Chinese EVs..
Tesla’s global unit sales have been falling. It needs to do well in China, the US and EU to reverse that. If BYD’s China sales are any measure, this year could be rough for Tesla.
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