Chinese BYD overtook Tesla in revenue for the first time

Chinese electric car maker BYD reported quarterly revenue that surpassed Tesla’s for the first time since the companies went head-to-head in a silent competition over global electric car sales. Revenue at China’s best-selling automaker rose 24% year-on-year in the third quarter to 201.1 billion yuan ($28.2 billion), surpassing Tesla, which posted sales of $25.2 billion in the same period.

Image source: BYD

BYD sold 1.12 million electric and hybrid vehicles in the third quarter, causing the company’s net profit to rise 11.5% to an all-time high of 11.6 billion yuan ($1.630 billion), which is still noticeably lower than Tesla’s profit, which amounted to $2 .2 billion. For the three quarters of 2024, BYD’s net profit amounted to 25.2 billion yuan ($3.54 billion) on revenue of 502.3 billion yuan ($70.55 billion).

Today, BYD and Tesla pose a direct threat to traditional automakers, especially as giants such as Volkswagen, Ford, Stellantis and General Motors struggle for profitability, and perhaps even the survival. It is worth noting that against the backdrop of declining demand for electric vehicles, BYD found itself in an advantageous situation compared to Tesla thanks to its wide range of hybrid vehicles.

Hybrid vehicles are a major contributor to BYD’s revenue growth, not least because some models’ powertrains offer a range of more than 2,000 kilometers when upgraded. Another key advantage of BYD is its vertically integrated supply chain, and producing more parts locally gives it a cost and scalability advantage in vehicle production.

Tesla is limited by its aging lineup of electric vehicles and is currently focused on ramping up production of the Cybertruck pickup truck and introducing its Full Self-Driving system. However, Tesla’s potential and long-standing leadership in electric vehicle sales have helped it cement itself as the world’s most valuable automaker. BYD ranks third, behind Toyota Motor, but ahead of VW, Mercedes and Detroit automakers.

BYD is reaping benefits from resurgent domestic demand in China, which has been boosted by an improved package of national and local government subsidies aimed at phasing out gasoline cars in favor of electric cars and hybrids. These local sales help BYD fend off increased opposition from national regulators in the US and EU.

The European Union this week raised tariffs on electric vehicles from China to 45%, heightening trade tensions between the world’s top exporters. The tariffs are also hampering BYD’s sales in the US. The situation may change in the next year and a half – BYD recently announced plans to become a full-fledged European automaker by opening factories in Hungary and Turkey.

The prospects for further growth of BYD’s profits in the last quarter are assessed very positively. The last three months of any year are generally considered the peak shopping season. And in addition to the subsidies, China’s central government agencies have been ordered to increase purchases of electric vehicles.

Based on the current delivery rate, BYD will be able to achieve its annual sales target of 4 million vehicles. In the first eight months of 2024, about 2.74 million electric cars and hybrids were sold. Experts estimate that BYD’s sales will increase to 500,000 vehicles per month by November.

BYD’s Hong Kong-listed shares fell 0.7% on Wednesday, trimming its overall annual gain to 37.6%. Tesla shares are up 4.4% year to date.