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Guillaume Guichard
The Chinese wave has surged past Tesla. The American electric car manufacturer has been overtaken in the fourth quarter of 2023 by its Chinese competitor, BYD. Elon Musk's company sold 484,507 cars during the last three months of 2023, compared to BYD's 526,000.
For the entire year, Tesla retains its crown. It sold 1.8 million all-electric vehicles, compared to 1.6 million for its Chinese counterpart. BYD also sells hybrids, bringing its total registrations to 3.01 million in 2023, up from 1.8 million in 2022—a 66% increase.
Tesla's performance falls short of the expectations set by Elon Musk at the beginning of last year when he informally aimed for 2 million units. Nevertheless, his brand still experienced a 38% sales growth over twelve months, a figure that many manufacturers would envy.
However, the historical ambition of the American company was to grow by 50% annually until the end of the decade, and it invested heavily to achieve this target in 2023. Tesla triggered a price war in China, a highly competitive market, to defend its market share.
It launched the same aggressive price-cutting offensive in Europe to undercut local competitors like Renault, even though it dominates the passenger car market. As a result of these price efforts, Tesla saw its profitability decline.
The most favorable momentum is now on BYD's side. BYD has just begun its expansion into export markets. As it is unlikely to expand into the United States due to protectionist barriers, particularly anti-Chinese ones, it is focusing its efforts on a commercial offensive in Europe.
In addition to a mid-range SUV and a large SUV, BYD aims to attract European customers with a city car, the Dolphin, and a luxurious sedan, the Seal. The design of the latter strongly resembles Tesla's. As proof of its serious and long-term commitment to the Old Continent, BYD announced in late December that it will build an assembly plant in Hungary in the coming months.
For Tesla, the growth margins for sales seem more limited in the short term. Established in major markets (China, Europe, the United States), the company does not have a very extensive product plan. Its sleek and futuristic pickup truck is unlikely to significantly increase volumes. It remains expensive, and production is challenging, so the ramp-up is expected to take twelve to eighteen months, Elon Musk admitted. Tesla is only preparing to refresh its successful SUV, the Model Y, the best-selling electric car in the world. However, the company is reportedly working on a compact model priced at less than 25,000 euros, which it plans to manufacture at its Berlin plant.
Historical competitors are accelerating in this segment. Citroën is launching its C3 electric at 23,300 euros, and Renault will unveil its new R5 electric at the Geneva Motor Show in a few weeks, priced at less than 25,000 euros, followed by an even cheaper Twingo in 2026. In short, in addition to Chinese competition, historical players are likely to give Tesla a run for its money.