Tesla sales stall as China's BYD closes in

Tesla, the well-known electric vehicle manufacturer, is experiencing a decline in sales for the first time in over a decade, while a Chinese competitor, BYD, is rapidly closing the gap. In December, BYD achieved record sales, showcasing their Yangwang U9 model at the Essen Motor Show in Germany. Tesla, led by billionaire CEO Elon Musk, delivered approximately 1. 79 million vehicles in the past year, which is a slight decrease from the 1. 8 million cars sold in 2023. Despite Tesla's efforts to attract buyers by reducing prices multiple times throughout the year, they have struggled to maintain their position as the world's leading electric vehicle manufacturer. Meanwhile, BYD reported impressive sales figures, with 1. 76 million electric vehicles sold in 2024. The Shenzhen-based company saw its total vehicle sales soar by over 41% year-on-year, reaching more than 4. 2 million units. This growth was primarily driven by the popularity of their hybrid vehicles. Notably, BYD sells around 90% of its cars within China, where they have been steadily increasing their market share against foreign brands like Volkswagen and Toyota. The rise in car sales in China has been fueled by intense competition, which has led to lower prices, as well as government incentives encouraging consumers to replace older vehicles with electric or more fuel-efficient options. Tesla also considers China a crucial market, but they have been losing ground to competitors as the price war intensifies. Additionally, demand for electric vehicles has softened in other regions, including the United States and Europe, posing challenges for various automakers. Major companies such as Volkswagen, Ford, and General Motors have adjusted their sales targets or postponed investments in electric vehicle technology in response to these market conditions. Elon Musk has attributed Tesla's weaker sales, in part, to the rise in borrowing costs since 2022, which has made purchasing vehicles more expensive for consumers. Analysts have also pointed to increased competition and concerns regarding the Tesla brand, particularly as Musk becomes more involved in political matters, which some view as controversial. Tesla's sales experienced a slump in the first half of 2024, but there was a slight recovery in the latter part of the year. In the final quarter of 2024, Tesla delivered around 495,000 cars, marking a 2% increase compared to the same period last year and setting a quarterly record. However, the company's share price, which had surged over 60% in the previous year, fell by 5% during morning trading, as the sales figures fell short of the approximately 500,000 units anticipated by analysts. Christopher Carey from the Carnegie Investment Council remarked, 'If you don't meet expectations, it can be pretty tough out there. ' In the previous month, two Japanese automakers were also working to regain their footing against the growing competition from the Chinese automotive industry. Earlier in the month, a significant leadership change occurred within a company that owns brands such as Vauxhall, Jeep, Fiat, Peugeot, and Chrysler, following a boardroom conflict. The sudden departure of the CEO came just two months after Stellantis issued a profit warning. Governments have begun to intervene to protect domestic manufacturers. In October, a new tax of up to 45. 3% on imports of Chinese-made electric vehicles was implemented across the European trade bloc. The United States has also imposed a 100% duty on electric vehicles from China, and President-elect Donald Trump is expected to introduce additional tariffs on imports. Despite these challenges, BYD has been expanding its presence in emerging markets. However, the company faced a setback in Brazil, its largest overseas market, when allegations surfaced regarding poor working conditions, with reports describing them as comparable to 'slavery. ' BYD responded by severing ties with the construction firm involved and reaffirmed its commitment to full compliance with Brazilian laws.