5 reasons BYD is surging ahead after eclipsing Tesla’s quarterly sales for the first time

The automaker launched the Yangwang U8, a $150,000 premium SUV that comes with an onboard drone last year.

BYD also unveiled its first supercar, the 1.68 million yuan ($235,000) Yangwang U9, in February.

The expansion of local automakers into China’s premium market has put pressure on European giants like Mercedes and BMW. Experts told BI that this would enable firms like BYD to target less price-sensitive customers and grow beyond China’s brutally competitive mass market.

3. Global expansion

BYD has embarked on an ambitious expansion drive this year to boost sales outside China. Executives have said they want half of BYD’s sales to come from abroad in the future.

Though US and European tariffs on Chinese EVs make selling in these regions problematic, BYD is rapidly setting up factories worldwide to cut costs and avoid trade barriers. It’s also focusing on emerging markets such as Mexico and Brazil.

4. Hybrids

A key part of BYD’s success is its hybrid range. Unlike its rival, Tesla, BYD also offers a selection of hybrid vehicles, which are popular in China.

Some 311,000 of the 500,000 passenger vehicles BYD sold in October were hybrids, with hybrid sales rising by 62% year-on-year.

“BYD’s high degree of vertical integration — making rather than buying many key strategic components — means it can control production of batteries and chips and can do so at very low cost,” said David Bailey, professor of business economics at the University of Birmingham.

BYD did not respond to a request for comment from BI.