How BYD Caught Up With Tesla in the Global EV Race

The Chinese group is poised to outsell its US rival in 2025 after it dramatically narrowed the technology gap between the two.

- Kana Inagaki, Edward White and Stephen Morris

In mid-2022, when BYD executive Lian Yubo was asked to compare Chinese manufacturing with Tesla's technology, he remarked that Mr Elon Musk was an example that all Chinese carmakers could learn from. "Tesla is a very successful company no matter what. BYD respects Tesla and we admire Tesla," he said in an interview on Chinese state media.

Yet just three years later, Tesla's technological lead over its Chinese rivals has narrowed dramatically. It is fighting to stay ahead in the world's largest car market, its sales are falling in many other countries and its efforts to develop fully self-driving vehicles are running into regulatory roadblocks.

Having once scoffed at the idea that BYD could ever be a competitor to Tesla, Mr Musk returned from a visit to China in 2024 with a somber assessment for his senior management. "He had seen the BYD factories, the cost and their tech," says one former Tesla executive, adding that Mr Musk believed China was winning the electric vehicle (EV) race.

As Tesla's sales decline following Mr Musk's forays into US politics and amid a lack of new models, BYD has overtaken it to become the world's largest manufacturer of EVs. Its annual revenues surpassed US$100 billion (S$128.5 billion) for the first time in 2024.

Now, the industry's shift towards autonomous vehicles and artificial intelligence (AI) is writing a new chapter in what has become not just a rivalry between the world's top two EV makers but a central pillar of US-China technological competition.

"In the West, Tesla still owns EVs; they still have a clear lead on software-defined vehicles and everyone is still trying to catch up to that," says Barclays analyst Dan Levy. "China is a different situation. Tesla's lead from a tech perspective is not nearly as clear, if there's any lead at all."