Tesla vs BYD

Don’t underestimate your opponents

This interview is pure gold.

14 years have passed since it was aired. Who’s laughing now? It’s just incredible how much BYD has improved.

Even Musk himself seems to admit his misjudgment. In his 2024 interview, Musk warned that “Chinese EV firms will demolish rivals without trade barriers.”

BYD surpassed Tesla in FY24 revenue, reporting $107 billion compared to Tesla’s $97 billion. It’s a remarkable achievement considering that BYD is effectively banned in the US.

Many people still misunderstand that BYD is just a local Chinese brand. It isn’t. The company generates nearly 30% of its sales from overseas regardless of trade bans in the advanced countries. BYD is already the number-one brand in many developing countries. Recently, they surpassed Tesla in sales even in Europe. They are eating Elon’s lunch, fast.

Many people say BYD is playing unfairly because it is subsidized by the Chinese government. Let’s be honest here. China isn’t the only country acting against the traditional rules and principles of free market pricing. Not just BYD, but the entire Chinese EV industry is targeted with tariffs in the US and the EU. All major car-producing countries are subsidizing their local industries. They cannot subsidize at the scale China is doing, that’s all.

In note, Chinese cars are no longer cheap because of low wages. Yes, low labor cost helps, but innovation is what makes real differences. China is at the forefront of smart manufacturing, and it is far ahead of its rivals in production efficiency.

Moreover, Chinese cars are not just cheap. They are also genuinely good. Every year, they introduce new models, and it is hard to tell if Telsa is still leading the EV innovation. This March, BYD shocked the world by unveiling a new battery system that can charge a vehicle in 5 minutes.

In the end, those who can build better and cheaper products will win the game. The US subsidized billions of public funds to protect its local automakers but the US couldn’t stop Japan from taking over the market.

In the face of economic challenges, more and more people will move toward affordable Chinese cars. It’s just a matter of time before resistance against Chinese makers will be softened like Japanese brands evolved from cheap rip-offs to respected products.

Nothing fuels competitors like ignorance. The traditional auto industry underestimated Telsa but it didn't take long until they found out they were running out of road. Perhaps, we are about to witness history repeating itself.

Don’t underestimate your opponents, especially those who overestimate themselves.