- Tesla has reclaimed the top spot in EV sales from BYD, but overall EV sales are declining
- Factors contributing to the decline in EV sales include slowing economies, reduced subsidies, and competition from traditional car makers
- BYD is expanding its presence outside of China to diversify revenue streams, but faces challenges in European markets
- Tesla's poor sales can be attributed to multiple factors including competition, old models, and possibly Elon Musk's behavior
- European regulators are considering imposing duties on Chinese EV imports to protect domestic car makers

- The product is 345 years old and is receiving facelifts
- In a rapidly evolving EV market, consumers are hesitant to invest in an old product
- Gregor Sebastian from Rhodium Group was interviewed

Tesla reclaimed the top spot in electric vehicle sales - breezing past BYD at the start of 2024. All the while, there's actually little for either carmaker to celebrate: EV sales in general are declining. Industry expert Gregor Sebastian shares his insights on what's shaking up the EV market.

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Chinese electric vehicle giant BYD only got to be the world's top EV seller for a single quarter.

Now it's handing back the title to Tesla.

All the while, there's actually little for either carmaker to celebrate.

With me here to talk about the shake-up in the EV world is Gregor Sebastian, senior analyst at Rhodium Group.

Gregor, Tesla is the EV world's top dog again, But sales are down nevertheless.

Should Tesla fans be impressed or disappointed right now?

It's definitely not great news for Tesla.

I mean, ultimately, you need to judge Tesla's or a company's performance against the overall market or on its own terms.

So there is obviously a little bit of solace that they can take in regaining the crown from BYD, but it's still not great news.

We also have to look at how we actually slice the data.

So if you look at the quarter on quarter sales figures, both companies have seen a decline.

But if you look at the year on year change, so looking at the quarterly performance in Q1 2023, BYD actually showed growth, whereas Tesla also here saw declining sales.

Yeah, let's have a closer look at the BYD Tesla competition data.

So over the past year, Tesla clearly sold more electric vehicles than any other car maker in the world initially.

And last year, the Chinese company sold over 3 million cars, that's 60% more than Tesla.

Keeping in mind though that BYD's numbers are for fully electric vehicles and plug-in hybrids combined.

The company counts both types as new energy vehicles.

But a closer look at the past few quarters shows that BYD also got ahead in sales of just electric vehicles.

Tesla sold around 450,000 EVs in each quarter, while BYD started the year smaller and increased its sales every single quarter, passing Tesla in the fourth quarter of last year.

Now, Gregor, the latest data is showing that Tesla has reclaimed the top spot in EV sales.

That's after a steep drop in sales for both companies.

As we mentioned, it's all a bit of a roller coaster ride right now.

Yeah, I think we have to look in each market 1 by 1, right?

So if you look at the 3 biggest EV markets at the moment, obviously China is the biggest 1, right?

Accounting for roughly 2 thirds of global EV sales.

And after that you have Europe and the North American market.

And looking at BYD first, it's key to point out that BYD is selling more than 90% of its vehicles in China.

So it's really a China only story for them at this point.

And I think the decline in China is mainly due to 2 factors.

First of all, China is facing a slowing economy in general.

A lot of people are kind of cutting back on spending, especially on big, big goods like a new vehicle.

And additionally, in this quarter, you had a very long national holiday, Chinese New Year, which meant that for over a week, there were basically no sales and no productions.

That has really cut into BYD sales in particular.

Tesla obviously also has a massive presence in the Chinese market, but its sales are a little bit more diversified across the globe.

A lot of the vehicles that they produce in their Shanghai Gigafactory are then shipped to Europe or other Asian economies.

And here I think it's also critical to point out that we've also seen a slowing growth in EV sales in other markets, right?

In Europe, for instance, The kind of, the slowdown is related to multiple factors.

First of all, consumers are buying fewer new vehicles from the get-go.

They're looking more at secondhand car sales and here EVs are doing a little bit worse.

And secondly, some companies in some countries are also cutting back on EV purchasing subsidies.

Germany, for instance, which is a big important market in the EU, slashed EV purchasing subsidies at the end of last year.

So that's kind of also hurting companies like Tesla in those markets.

Now you mentioned the importance of the Chinese market for BYD, but it is trying to expand its presence outside of China, particularly in Japan, Southeast Asia and Europe.

What do you make of this recent shipment of BYD cars arriving in Europe, as well as the construction of plants not only in Hungary, but also in Thailand and Brazil?

So I think this all goes back to the fact that China's EV market, while it is by far the largest EV market in the world, is slowing.

So we can't expect that this high double-digit growth is going to continue this year or next year.

So car makers need to look for a more diversified revenue stream.

This is also because competition in China is just continually ramping up, right?

We have newcomers in the Chinese market like phone makers, Xiaomi, that recently launched an EV sedan model.

So the competition in China is increasing while sales are slowing down.

So it's kind of a logical step to then look into overseas market, especially because you can actually sell your vehicles there for premium, right?

So the profit margins that BYD has in Germany, but also in Brazil or Thailand, are often a lot higher than in their home market.

So we have seen this build up in Europe, But Germany is well known for its auto manufacturing, with some really big brands calling this country home.

But admittedly, many of these Chinese EVs could be cheaper than domestic-made cars.

And that's true for other European brands as well.

So can we expect some kind of a reaction from either consumers or from regulators to rally around domestic companies?

I think there is a strong home market advantage in Europe.

French consumers prefer buying French vehicles, German consumers prefer buying a Volkswagen, BMW, Mercedes car.

Nonetheless, especially in the kind of more compact vehicle segment, for smaller vehicles, price is obviously a key differentiator.

And it's interesting that actually a lot of Chinese companies like BYD have not come in the European market with the cheapest models quite yet.

The Seagull, which is 1 of China's BYD's cheapest models, has not yet been launched.

And also when you look at the price difference between their vehicle price tag in China and in Europe, it's quite astonishing, right?

Vehicles here are often 50 to 60 percent more expensive.

So the companies are trying to avoid this kind of label as being a budget and low quality car and are trying to compete more in line with what European car makers are offering.

Whether that's a good strategy, I think only time will tell, but this is what we're seeing for now.

I think looking at the regulator picture, I think this is really interesting, right, because the automotive industry in Europe, especially in Germany, but also in countries like the Czech Republic, is really important for overall economic growth and GDP, right?

So there is an interest in kind of hitting back to a certain degree against a potential flood as Brussels has called it, of cheap EV imports from China.

So we have a current probe into subsidized EV imports from China ongoing and we expect that probably in the next 2 to 3 months, provisional duties will be put onto these vehicles.

Now, Tesla justified its own poor figures by blaming factory stoppages caused by disruptions in the Red Sea and an arson attack by environmentalists in Germany.

But for at least 1 analyst, there's really only a single reason.

Basically, Tesla can't sell its cars due to Elon's behaviour, says Ross Gerber, CEO of investment management firm Gerber Kawasaki.

He goes on to say, let's stop blaming the Houthi rebels or German environmental terrorists.

Well, I think that's a little bit too simplistic for me.

I think the sales downturn for Tesla is really linked to multiple factors.

And it's probably linked to Elon Musk himself as well, who is obviously a decisive but also, you know, divisive figure, you know, as a head of the company and is probably off-putting to some of the consumers.

I do also believe, though, that, you know, the attacks by Huji rebels and also the arson attack on the Berlin factory have a reason to play.

Crucially though for me actually 2 other factors.

First of all competition is really stepping up both in China where as I already mentioned companies like Xiaomi are entering the market but also you know the legacy car makers Volkswagen, Peugeot, Ford they're all launching more and more EV models that are now in direct competition with Tesla, which for the last 3 to 4 years basically had an unchallenged market in the EV segment.

And I think the second factor that we also have to watch is that Tesla is now competing with relatively old models, right?

Model 3 and Model Y are not new models on the market, right?

They are 345 years old and obviously they're getting facelifts now, but in a rapidly evolving EV market that we're currently witnessing, consumers are also hesitant to bet on a comparatively old product like that.

Gregor Sebastian from Rhodium Group, thanks for speaking to us.


Speaker 0: It's rain just lasted 3 months. Chinese electric vehicle giant BYD only got to be the world's top EV seller for a single quarter. Now it's handing back the title to Tesla. All the while, there's actually little for either carmaker to celebrate. EV sales in general are declining.

With me here to talk about the shake-up in the EV world is Gregor Sebastian, senior analyst at Rhodium Group. Gregor, Tesla is the EV world's top dog again, But sales are down nevertheless. Should Tesla fans be impressed or disappointed right now?

Speaker 1: It's definitely not great news for Tesla. I mean, ultimately, you need to judge Tesla's or a company's performance against the overall market or on its own terms. So there is obviously a little bit of solace that they can take in regaining the crown from BYD, but it's still not great news. We also have to look at how we actually slice the data. So if you look at the quarter on quarter sales figures, both companies have seen a decline.

But if you look at the year on year change, so looking at the quarterly performance in Q1 2023, BYD actually showed growth, whereas Tesla also here saw declining sales.

Speaker 0: Yeah, let's have a closer look at the BYD Tesla competition data. So over the past year, Tesla clearly sold more electric vehicles than any other car maker in the world initially. Then in 2022, BYD passed Tesla. And last year, the Chinese company sold over 3 million cars, that's 60% more than Tesla. Keeping in mind though that BYD's numbers are for fully electric vehicles and plug-in hybrids combined.

The company counts both types as new energy vehicles. But a closer look at the past few quarters shows that BYD also got ahead in sales of just electric vehicles. Tesla sold around 450,000 EVs in each quarter, while BYD started the year smaller and increased its sales every single quarter, passing Tesla in the fourth quarter of last year. Now, Gregor, the latest data is showing that Tesla has reclaimed the top spot in EV sales. That's after a steep drop in sales for both companies.

As we mentioned, it's all a bit of a roller coaster ride right now. Big picture. What's causing EV sales to drop?

Speaker 1: Yeah, I think we have to look in each market 1 by 1, right? So if you look at the 3 biggest EV markets at the moment, obviously China is the biggest 1, right? Accounting for roughly 2 thirds of global EV sales. And after that you have Europe and the North American market. And looking at BYD first, it's key to point out that BYD is selling more than 90% of its vehicles in China.

So it's really a China only story for them at this point. And I think the decline in China is mainly due to 2 factors. First of all, China is facing a slowing economy in general. A lot of people are kind of cutting back on spending, especially on big, big goods like a new vehicle. And additionally, in this quarter, you had a very long national holiday, Chinese New Year, which meant that for over a week, there were basically no sales and no productions.

That has really cut into BYD sales in particular. Tesla obviously also has a massive presence in the Chinese market, but its sales are a little bit more diversified across the globe. A lot of the vehicles that they produce in their Shanghai Gigafactory are then shipped to Europe or other Asian economies. And here I think it's also critical to point out that we've also seen a slowing growth in EV sales in other markets, right? In Europe, for instance, The kind of, the slowdown is related to multiple factors.

First of all, consumers are buying fewer new vehicles from the get-go. They're looking more at secondhand car sales and here EVs are doing a little bit worse. And secondly, some companies in some countries are also cutting back on EV purchasing subsidies. Germany, for instance, which is a big important market in the EU, slashed EV purchasing subsidies at the end of last year. So that's kind of also hurting companies like Tesla in those markets.

Speaker 0: Now you mentioned the importance of the Chinese market for BYD, but it is trying to expand its presence outside of China, particularly in Japan, Southeast Asia and Europe. What do you make of this recent shipment of BYD cars arriving in Europe, as well as the construction of plants not only in Hungary, but also in Thailand and Brazil?

Speaker 1: So I think this all goes back to the fact that China's EV market, while it is by far the largest EV market in the world, is slowing. So we can't expect that this high double-digit growth is going to continue this year or next year. So car makers need to look for a more diversified revenue stream. This is also because competition in China is just continually ramping up, right? We have newcomers in the Chinese market like phone makers, Xiaomi, that recently launched an EV sedan model.

So the competition in China is increasing while sales are slowing down. So it's kind of a logical step to then look into overseas market, especially because you can actually sell your vehicles there for premium, right? So the profit margins that BYD has in Germany, but also in Brazil or Thailand, are often a lot higher than in their home market.

Speaker 0: So we have seen this build up in Europe, But Germany is well known for its auto manufacturing, with some really big brands calling this country home. But admittedly, many of these Chinese EVs could be cheaper than domestic-made cars. And that's true for other European brands as well. So can we expect some kind of a reaction from either consumers or from regulators to rally around domestic companies?

Speaker 1: For sure. I think there is a strong home market advantage in Europe. French consumers prefer buying French vehicles, German consumers prefer buying a Volkswagen, BMW, Mercedes car. Nonetheless, especially in the kind of more compact vehicle segment, for smaller vehicles, price is obviously a key differentiator. And it's interesting that actually a lot of Chinese companies like BYD have not come in the European market with the cheapest models quite yet.

The Seagull, which is 1 of China's BYD's cheapest models, has not yet been launched. And also when you look at the price difference between their vehicle price tag in China and in Europe, it's quite astonishing, right? Vehicles here are often 50 to 60 percent more expensive. So the companies are trying to avoid this kind of label as being a budget and low quality car and are trying to compete more in line with what European car makers are offering. Whether that's a good strategy, I think only time will tell, but this is what we're seeing for now.

I think looking at the regulator picture, I think this is really interesting, right, because the automotive industry in Europe, especially in Germany, but also in countries like the Czech Republic, is really important for overall economic growth and GDP, right? So there is an interest in kind of hitting back to a certain degree against a potential flood as Brussels has called it, of cheap EV imports from China. So we have a current probe into subsidized EV imports from China ongoing and we expect that probably in the next 2 to 3 months, provisional duties will be put onto these vehicles.

Speaker 0: Now, Tesla justified its own poor figures by blaming factory stoppages caused by disruptions in the Red Sea and an arson attack by environmentalists in Germany. But for at least 1 analyst, there's really only a single reason. Basically, Tesla can't sell its cars due to Elon's behaviour, says Ross Gerber, CEO of investment management firm Gerber Kawasaki. He goes on to say, let's stop blaming the Houthi rebels or German environmental terrorists. Only 1 person is responsible for this.

Gregor, do you agree with Ross Gerber?

Speaker 1: Well, I think that's a little bit too simplistic for me. I think the sales downturn for Tesla is really linked to multiple factors. And it's probably linked to Elon Musk himself as well, who is obviously a decisive but also, you know, divisive figure, you know, as a head of the company and is probably off-putting to some of the consumers. I do also believe, though, that, you know, the attacks by Huji rebels and also the arson attack on the Berlin factory have a reason to play. Crucially though for me actually 2 other factors.

First of all competition is really stepping up both in China where as I already mentioned companies like Xiaomi are entering the market but also you know the legacy car makers Volkswagen, Peugeot, Ford they're all launching more and more EV models that are now in direct competition with Tesla, which for the last 3 to 4 years basically had an unchallenged market in the EV segment. And I think the second factor that we also have to watch is that Tesla is now competing with relatively old models, right? Model 3 and Model Y are not new models on the market, right? They are 345 years old and obviously they're getting facelifts now, but in a rapidly evolving EV market that we're currently witnessing, consumers are also hesitant to bet on a comparatively old product like that.

Speaker 0: Gregor Sebastian from Rhodium Group, thanks for speaking to us.

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What's happening to electric vehicle sales? | DW Business