2023-04-26 19:11:44
The rise of Chinese brands, coupled with the growing adoption of electric cars, is straining traditional manufacturers. Supporting evidence: BYD has just overtaken Volkswagen in China.
In China, car manufacturers are waging a merciless war to conquer market share, which calls into question the viability of certain historical Western groups. Against this backdrop, BYD became China’s biggest automaker in the first quarter, according to Bloomberg data, overtaking Volkswagen, which had been the undisputed market leader for 15 years.
BYD’s rise is very fast
BYD’s market share reached 10.4%, while Volkswagen’s fell to 10.1%, well below its peak of 16.6% in 2014. To see the rise BYD: Two years ago, BYD’s market share was only 2%, but it is now the top-selling brand in China. In the Chinese market alone, BYD might sell nearly 3.7 million cars by the end of the year.
The electric car and its technology are at the heart of this success. BYD only sells 100% electric or plug-in hybrid vehicles. In 2021, more than 3.5 million such vehicles were sold in China, a figure that is expected to reach 6.5 million in 2022.
100% electric or rechargeable hybrid
Volkswagen sold around 25,000 electric and plug-in hybrid vehicles in the first quarter of 2023, while BYD sold 441,000, of which only 126 were gasoline-powered. Volkswagen is not the only one to suffer sales declines, traditional manufacturers, such as Toyota and Honda, are also struggling to adapt to new market demands and are seeing their sales decline.
BYD seduces the Chinese public by offering electric cars or plug-in hybrids, highly technological and at a price significantly lower than that of European, Japanese or American groups. The company also flooded the market with new models in a very short time, presenting seven new models at the Shanghai Auto Show alone.
BYD benefits from deep vertical integration
In Europe, BYD’s strategy is similar, offering electric cars with market-average range, lots of technology and a lower price than its rivals. The control that the company has over a large part of the production phases of the electric car allows it to be agile and reduce its costs, distinguishing it from its competitors. Indeed, BYD designs, develops and produces in-house key elements such as batteries, semiconductors, heat pumps and software.
To maintain its presence and position in the market, Toyota is already collaborating with BYD to launch new electric cars in China. Toyota’s latest models take advantage of BYD’s batteries and its software, a testament to the Chinese firm’s impact on the automotive sector.
It is difficult to predict the influence of a group such as BYD on the European automobile market in the next 5, 10 or 15 years. BYD is not the only ambitious Chinese player in this field, there are also companies like NIO, Geely (which owns Volvo, Polestar, etc.), SAIC (owner of MG), Great Wall and XPeng. The future development of the automotive market might be greatly impacted by these growing Chinese companies, which seek to expand their presence and compete with established brands.
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