BYD, Chinese EV Rivals Turning Into Tesla’s Toughest Competition

At the start of the 21st century, electric vehicle sales were powered by booming demand and profit from the Chinese market. In the first six months of the year, China's BYD overtook the U.S. EV pioneer in total sales.

BYD delivered more EV and plug-in hybrid vehicles to customers in the first half of the year than it did in the same period a year ago. In June, 64,218 plug-in hybrid vehicles were sold by BYD, compared to 64,218 battery-only models sold byTesla. As its Shenzhen-based rival and other Chinese competitors ramp up production, its lead appears to be decreasing.

The company delivered more than 640,000 units in the first half of the year.

BYD seems to have been unaffected by the Covid-related lockdowns that slowed production at the Shanghai plant.

It's no surprise that Chinese EV makers have made gains. China's EV sales hit 3.3 million units in 2021, dwarfing the 608,000 sold in the U.S. China has had a wide range of smaller, lower-cost EV such as BYD's attractive Han sedan that is priced from about $32,800. Affordability is a big challenge for potential buyers in the U.S. where the current average transaction price for a battery-powered model tops $64,000.

According to a research note, emerging China EV companies are trying to target the premium end of the local market. There is intense domestic competition in the mass market from Leap Motor, Hozon Neta, WM Motor, BYD, and numerous sub- brands. Younger entrants are willing to absorb deep losses in order to gain volume share.

BYD NIO has posted steady sales gains in China this year thanks to new products like its electric ES7 SUV that went on sale last month. In the first half of the year, the company's EV sales were up 14 percent.

The addition of new plants in Germany and Texas is expected to increase production in the second half of the year.

As newer Chinese players look to expand sales in Europe and Asia, Volkswagen and theHyundai-Kia group are increasing their competition for the market. With aggressive plans to boost production and sales of a broad range of electric vehicles, GeneralMotors and Ford aim to cut into the dominance ofTesla in the U.S. The cheap Chevrolet Bolt EV, starting at $26,595, is one of the things GM is looking at for mass-market buyers. The F-150 is the top-selling vehicle in the U.S. and its base price is less than that of the Model 3.

With the possibility of a recession in the U.S. and Europe from late this year, and the introduction of its luxury-priced vehicle line, there is a chance of lower demand for its products.

With dark economic storm clouds on the horizon and Musk himself thinking recession risk is imminent, what does this mean forTesla's demand story going forward? The analyst wrote. The softer macro will impact demand around the edges in the coming quarters, but we believe there is ample demand capacity to hit 2 million units in 2023 globally with production capacity that can exceed this number.

If they can ramp up production through 2023 and navigate ongoing supply chain headaches and rising costs for raw materials and components, they will be able to face new competition in the U.S.

Rivian reassured investors on Wednesday that it will deliver at least 25,000 electric pickup, SUVs and delivery trucks this year. The stock price went up in the afternoon. In the afternoon, shares of the company were down.