Electric Car Revolution: Tesla Sales up 83% Year on Year in Q2, as BYD does even better at 98% Surge

Ann Arbor (Informed Comment) – Tesla sales surged 83% in the second quarter compared to Q2 2022, and were up 10% over the first quarter. So reports Alan Ohnsmann at Forbes.

And Benziga reports that the Chinese car maker BYD out produced Tesla in the first two quarters of this year, rolling out 1,255,637 new energy vehicles as opposed to Tesla’s 889,015.

Investor’s Business Daily says that BYD’s second-quarter sales were up nearly 100% year over year, an even better showing than Tesla’s. BYD outperformed in Q2 by 27% over Q1 of this year.

All of Tesla’s vehicles are battery electric vehicles (BEVs), though, while half of BYD’s cars are still plug-in hybrids (PHEVs), which use the electric battery until it runs out and then switch to gasoline. PHEVs have been shown only to result in a 20% drop in carbon emissions, whereas battery electric vehicles result in a 60% – 80% drop in CO2 emissions, depending on where the car is made.

Although BYD builds electric buses in the US, its automobiles are not available for sale here, likely because it has no US factories and so would be at a disadvantage regarding tariffs and tax credits.

Although the Forbes article highlights Tesla’s price cuts as the reason for the skyrocketing sales, that factor may be most important in China and Europe. As for the United States, in my view the $7500 tax rebate in Biden’s Inflation Reduction Act — for which customers became eligible as of the start of 2023 — is probably a big part of the increased consumer demand here. Ohnsmann does argue that the price drop made Teslas eligible for the tax credit, since it is not available for really pricey luxury vehicles.

Also, the four Tesla auto plants at Austin, Texas, increased their output 86% to 479,700 units over the previous year.

Tesla does not provide breakdowns by region, but likely North America was the biggest market, with China second and Europe third.

Tesla has a goal of delivering 1.8 million vehicles in 2023,

Reuters reports that the price cut helped Tesla with its market share in China, where it faces increasing competition from several Chinese EV companies. The tax cuts have reduced the company’s profit margins, but CEO Elon Musk has said that he will favor a growth in sales over profits in the current economy.

Tesla also benefited from deals with Ford and GM, brokered by President Biden, giving EV owners of cars made by the latter two companies access to the network of fast chargers Tesla has installed all over the country. Moreover, Volkswagen’s rival Electrify America charging network has decided to adopt the Tesla charging ports as the North American standard.

While Tesla is the leading electric vehicle brand in the US by far, it is facing far more competition in the China market, a much bigger EV market than the US. Of the 27 million vehicles bought by Chinese consumers in 2022, 7 million or 25% were EVs. The US is way behind in this regard, though, where only 7% of new car registrations in 2022 were EVs. That number is likely to rise rapidly as the the full impact of the Inflation Reduction Act is felt, and as the charging network paid for in the Infrastructure and Jobs Act gets built out.

Mufit Yilmaz Gokmen writes at Global Fleet that 90 car manufacturers are offering EVs to Chinese consumers, at prices ranging from $5,000 to $150,000. The Chinese government is subsidizing Chinese companies, so that they have come to dominate 81% of the market.

Aside from Tesla, the biggest EV automaker in China is BYD, which now has about a third of the Chinese market, up from only 14% in 2021. It made and sold more EVs in 2022 (1.86 million) than did Tesla (1.31 million). Tesla is trying to remain competitive there, however. Its Shanghai plant can produce 1.1 million vehicles per year now, and the company plans another big battery plant there.