Interviews
18 Jan 24

"China will be decisive in the BYD vs Tesla competition"

The global electric vehicle (EV) market witnessed much competition in 2023. Eventually, two giants are left facing each other in the grand arena: Build Your Dreams (BYD) and Tesla. Nevertheless, these brands still need to be ready to serve the needs of large professional fleets in the global area, says Benjamin Kibies, Senior Automotive Analyst at Dataforce.  Kibies believes China will be the decisive region for the rivalry.

By the end of 2023, BYD's global sales reached 3,012,906 units, followed by Tesla with 1.81 million. While highly successful in the passenger car market, the two brands are limited in commercial vehicle production and their reach to large commercial fleets. BYD's commercial vehicle production, including electric buses and trucks, surged in 2023 but reached only 11,511 units. The long-awaited Tesla Cybertruck and Tesla Semi truck have yet to show their skills in commercial fleets. Additionally, Hertz's elimination of 20,000 EVs from its US fleet is a potent reminder that electrification is way beyond access to EVs. 

At this point, the other face of the medallion appears, which offers a much more complex challenge for EV makers: The global fleet market. According to Kibies, 2024 will be an excellent year for fleets to start intense electrification, and the rivalry between BYD and Tesla will be decided in China, the world's most oversized battery electric vehicle (BEV) market.

Before diving into the evaluations of the expected rivalry in the fleet market between the two brands by Kibies, let's first have a look at the typical advantages of BYD and Tesla that put them against each other in the global arena: 

  • Both have a solid customer base and production capacity in China 
  • Both are capable of developing advanced battery tech and have vast R&D resources  
  • Both hold strong partnerships in the EV battery market 
  • Both are active in Europe and also penetrating emerging markets
  • Both can manipulate the market through price cuts
  • Both rely on a solid supply chain and a high manufacturing capacity, allowing:
    • Offering affordable and premium passenger cars and commercial vehicles
    • Reaching out to a wide range of consumers in the fleet market

How are things in the fleet market? 

BYD and Tesla's growth in the global fleet market is still premature, and the statistics from Dataforce display the geographies where both EV makers are the strongest: 
 

China 

(volume) True Fleet Total Market
  2022 2023 2022 Jan-Nov 2023
BYD 203,047 259,164 1,603,166 1,916,325
Tesla 62,425  65,212 441,651 468,881
All brands 2,642,020  2,572,528 20,410,000 17,274,390

 

(market share) True Fleet Total Market
  2022 2023 2022         Jan-Nov 2023
BYD 7.7% 10.1% 7.9% 11.1%
Tesla 2.4% 2.5% 2.2% 2.7%
All brands 100.0% 100.0%  100.0% 100.0%


Europe 16

(volume) True Fleet Total Market
  2022 2023 2022 Jan-Nov 2023
BYD 622  3,587  5,315 12,390
Tesla 91,203   128,069  224,826 303,507
All brands 3,726,748  4,128,696  10,482,535 10,896,495
True fleets are registered as corporate fleet vehicles, excluding short-term rentals and demo vehicles. 

 

(market share) True Fleet Total Market
  2022 2023 2022         Jan-Nov 2023
BYD 0.0% 0.1% 0.1% 0.1%
Tesla 2.4%  3.1% 2.1% 2.8%
All brands 100.0% 100.0%  100.0% 100.0%
Data gathered from countries include Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Poland, Slovakia, Spain, Sweden, Switzerland, and the United Kingdom.

 

Australia

(volume) True Fleet Total Market
  2022 2023 2022 Jan-Nov 2023
BYD 427 248  2,113 10,975
Tesla 4,456 11,873  19,594 43,924
All brands 162,935 182,014    775,848 822,083

        

(market share) True Fleet Total Market
  2022 2023 2022 Jan-Nov 2023
BYD 0.3% 0.1% 0.3% 1.3%
Tesla 2.7% 6.5% 2.5% 5.3%
All brands 100.0% 100.0% 100.0% 100.0%

 

BYD registrations in China by model and fuel type, Jan-October 2023:

  True Fleet Total Market
  Volume Share Volume Share
Seagull Electric 4,637 1,8% 148,036 7.7%
Haitun Electric 13,366 5.2% 236,865 12.4%
Qin PHEV 30,279  11.7% 229,079 12.0%
Qin Electric 63,860 24.6% 66,902 3.5%
Qin Pro Electric 32,540 12.6% 98,554 5.1%
Yuan Plus Electric 27,967 10.8% 231,019 12.1%
Song Plus PHEBV 16,592 6.4% 346,982 18.1%
Total 259,164 0% 1,916,325 0%

 

Kibies points out three characteristics from these figures: 

  • Both brands have the biggest footprint in China, with BYD making 99.8% of its volume here (excluding the statistics from North America).
  • BYD is a bit stronger in the Chinese fleet market than in total new car registrations.
  • Tesla has a slightly higher share in the fleet market than in the total market, but the difference is insignificant (less than 0.5%).

The model ranges offered by the two brands are suitable for fleets, says Kibies, but except for BYD in China, the brands still need to be ready to serve the needs of large professional fleets, he adds.

Why fleets would prefer BYD or Tesla in 2024? 

The higher the level of service and professionalism of a brand, the higher demands the customer would have, says Kibies. "Total cost of ownership (TCO) is more important than the purchase price, and maintenance and repairs must be carried out quickly and close to the place of use. In larger fleets, a personal contact person should also be available."

In Europe, BYD and Tesla must be able to match these services as the longer-established brands, which is a competitive disadvantage for them, especially with large fleets. On the other hand, smaller companies, including innovative new brands, pay more attention to prices, and they appear to be a crucial customer base for Tesla and BYD. 

For fleets, residual value is another critical factor in the decision-making process. At this point, Tesla has another disadvantage: The sharp price cuts in 2023 reduced the trust, which can slowly be regained, says Kibies. 

According to Kibies, BYD and Tesla can benefit from different advantages in the Chinese and the European market: 

  • Tesla's model range in China and Europe focuses on the D segment, where most fleet vehicles are sold. Especially in the European fleet market, estate cars are more in demand, but most companies are prepared to make compromises when switching to BEVs and opt for a saloon (sedan) or SUV.
  • BYD's smaller and more affordable models in China, where most of its sales will occur in 2024, are also available. Namely, the Seagull and the Haitun are mostly targeting private customers.
  • BYD has an extensive model range in China, allowing the brand to make reasonable offers for professional users. Once again, Chinese fleets favour the D-segment sedans, and the BEV versions of the Qin and Qin Pro do most of BYD's sales in fleets.
  • BYD's number 2 model in Chinese fleets is the Yuan Plus (Atto 3 in Europe), which is equally attractive for private and fleet customers (which could also be seen regularly in Frankfurt). 

"BYD is widening its lead over Tesla" 

As for the predictions for 2024, BYD has the upper hand through its influence in the Chinese market. 

"China is not only the largest BEV market today but also has the largest growth dynamics in 2024, where Europe and North America are sticking with ICE cars. In this market, BYD is increasingly widening their lead over Tesla. While Tesla will continue to achieve large growth rates in Europe and the US, their EV markets are too small to compensate for China. Therefore, BYD's lead over Tesla, which they first achieved in Q4 2023, will widen in 2024." 

The fleet market is too large to be neglected, particularly in Europe, says Kibies, and the rivalry will be decided in China, where fleet sales are around 15% of the market, without being pivotal. For fleets, 2024 offers lots of potential: "Overcapacities and increasing competition resulted in higher discounts, even higher in large-volume purchases. Extended charging infrastructure and the vanishing of range anxiety are other pluses in the market." 

BYD's biggest bonus is the overall leadership in the Chinese market, which is also crucial for Tesla. 2024 will offer a great rivalry between China and Europe, also likely to provide a glimpse of this rivalry in North America, which is yet to spark. 

Authored by: Mufit Yilmaz Gokmen
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