Key Takeaways

• In H1 2023, China’s electric car maker BYD (Build Your Dreams) sold almost 1.2 million plug-in electric vehicles (incl. plug-in hybrids) alone, roughly double the combined total of BMW, Volkswagen and Mercedes
• BYD sold 500,000 battery vehicles in Q4 2023, beating Tesla for the first time
• 90% of their cars are sold in China across multiple price points. BYD have huge oversupply and are now focussing on the lower cost end of the European market

In a surprising turn of events, BYD has surpassed Tesla in car sales, marking a significant milestone in the electric vehicle (EV) industry. The Chinese automaker, known for its innovative approach to green technology, has seen a surge in demand for its electric vehicles, outpacing the once-dominant Tesla.

BYD’s success can be attributed to its strategic focus on affordability and a diverse range of electric vehicles. The company’s commitment to producing electric cars at various price points has resonated with a broad consumer base, capturing a market segment that Tesla had not fully tapped into.

Moreover, BYD’s strong presence in the Chinese market, the world’s largest automotive market, has played a pivotal role in its sales triumph. With robust government support for electric vehicles and an increasing environmental consciousness among Chinese consumers, BYD has capitalised on the favourable conditions to become a leader in EV sales. It Is sometimes overlooked that China has around 45% of its energy from renewable sources in 2022, which is up 26% from 2011.

These sales figures mark a turning point in the electric vehicle industry, signalling that success is not solely dependent on cutting-edge technology but also on catering to the diverse needs and preferences of consumers worldwide. As the competition between BYD and Tesla intensifies, it will be interesting to see how both companies adapt and innovate to maintain their positions in this dynamic market.

Bowmore Portfolios

It is important to identify emerging trends and whilst demand and visibility is high and growing, we believe that the infrastructure available for such vehicles will be a limiting factor for some time to come. Price, not just technology available, is now becoming a consideration within electric vehicle selection, and we suspect a far wider pool of companies to issue models accordingly. We expect the demand for clean energy to increase alongside this and given its sectors rather lacklustre performance last year, it is perhaps an area for us to consider – though with a balanced view of typically high capex and low (if any) profit turned within the sector.

Within our ESG mandate, we have recently invested within a sustainable water and waste thematic equity fund. With an AA battery taking 100 years to break down and a single microchip requiring 30 litres of water to be produced and with a Tesla requiring c.3,500 chips for production and larger and larger batteries, we forecast water and waste management as key growth areas for the future.