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Hong Kong CNN –
China's BYD sold a record number of cars in 2023, moving closer to displacing Tesla as the global electric vehicle leader.
The Chinese company reported a 62% increase in global sales to just over 30% According to a stock exchange report, there were three million units last year compared to 2022.
BYD sold 1.57 million battery electric vehicles (BEVs), up 73%, and 1.44 million hybrid vehicles last year. 52% higher than last year.
Tesla (TSLA) is expected to report its full-year sales figures as early as Tuesday. Analysts believe the US electric vehicle maker has roughly met its annual delivery target of 1.8 million BEVs. No hybrids are sold.
In 2022, BYD was about 400,000 units behind Tesla in global BEV sales. The gap is expected to have narrowed over the past year. And in the last quarter, BYD may have already overtaken Elon Musk's company.
In the fourth quarter, BYD sold 526,409 BEVs, more than 20% more than in the third quarter. Tesla must have delivered 473,000 units in the same quarter, according to a survey of 14 analysts cited by Portal.
BYD's rapid growth, backed by Warren Buffett, is emblematic of China's emerging electric vehicle industry.
China is making rapid progress The transition to electric vehicles is successful thanks to strong government support for the industry.
Beijing has set a target for at least 20% of new cars sold annually to be new energy vehicles (NEVs), which include BEVs, plug-in hybrids and hydrogen fuel cell vehicles, by 2025. By 2035, according to the government, NEVs should become the “mainstream” of new car sales.
The first target was achieved in 2022, about three years earlier. The second could also be achieved sooner than expected.
In the first 11 months of 2023, 8.3 million units of new energy vehicles were sold, accounting for more than 30% of total car sales, according to data from the China Association of Auto Manufacturers released last month.
Miao Wei, former minister of China's Ministry of Industry and Information Technology, said at an auto forum in November that the government's NEV penetration target of 50% by 2035 would likely be achieved by 2025 or 2026 at the latest, according to state media.
Analysts say China's leading role in global industry is also due to its market size, cheap labor and supply chain dominance.
“China is now a leader in manufacturing and expanding its competitive advantages by relying on its huge domestic market and first-mover advantage,” analysts at Natixis Asia, a French investment bank, wrote in a report in late November.
Its first-mover advantage and government support through infrastructure investments and subsidies have made it easy for Chinese electric vehicle makers to expand at home and abroad, they said.
However, increased competition and a brutal price war over the past year have hurt the profit margins of many automakers.
As China's economy lost momentum, automakers feared a decline in demand. In January, Tesla cut prices in China to attract customers and curb slowing growth, sparking a price war. Dozens of automakers followed suit to stay competitive.
The price war has driven up sales but threatened the profitability of the entire industry. In the first eleven months of last year, China's auto industry recorded a profit margin of just 5%, which is lower than the 5.7% in 2022 and the 6.1% in 2021, according to figures released last week were released by the Chinese Passenger Car Association, a government-backed industry group.
To offset the slowing domestic market, Chinese automakers are seeking growth outside the mainland by expanding in Europe, Australia and Southeast Asia.
Last month, BYD announced it would build an electric vehicle factory in Hungary, which would be its first passenger car factory in Europe. It already has a bus factory in Komárom, Hungary.