This has been a good couple of weeks for China’s BYD, the world’s top-selling electric vehicle maker. The maker of the Seagull, the Dolphin and the Yuan Plus EVs took another chunk out of Tesla, and scared off another potential rival, Apple.
Tesla shares fell 7% Monday on news that its sales plunged 19% in China last month compared to a year earlier – sinking to the lowest level since December 2022.
Tesla fattened up discounts and other sales sweeteners in China. But BYD keeps hammering down prices for its growing array of EVs.
Despite the price war, both BYD and Tesla suffered steep sales declines in China last month – reflecting not just the downtime of the Lunar New Year holidays but weakness in the overall Chinese economy.
Good news for BYD: China’s political leaders put supporting the EV sector front and center during a national economic policy meeting Tuesday.
Here’s where Apple comes in. The iPhone company last week scrapped its decade-long effort to build an electric, ultra-connected and potentially autonomous car. Apple CEO Tim Cook is expected to instead plow capital into advanced artificial intelligence.
Apple management launched Project Titan – the code-name for what I call the iSasquatch – when Tesla was gaining traction with the Model S and demonstrating that an EV was not just about batteries, but about the car as software platform.
Electric cars at the time appeared to be premium-priced, digital products selling to the affluent, tech-savvy consumers who are Apple’s base.
Fast forward a decade, and Apple’s executives and board confront an EV World that has become desolate landscape of value destruction and price wars.
China, a vital market for any Apple product, is a Darwinian battleground – thanks largely to BYD.
In the United States, once-promising EV startups Rivian and Lucid are struggling after losing 90% or more of their peak, post-IPO values. Tesla has lost 40% of its market cap since it reached the $1 trillion milestone in late 2021.
Consumer interest in electrified vehicles is growing – but not fast enough or at high enough prices to sustain profitable growth for most current players – let alone late starters such as Apple.
As BYD’s low-cost EVs – and the flotilla of competitive EVs from other Chinese brands – surge into export markets, the prospects for profits in the sector look bleak.
BYD cars aren’t selling in the United States…yet. But BYD is looking at building a car factory in Mexico – and U.S. automakers and politicians are not buying that BYD doesn’t intend to use a Mexican factory to circumvent the current 27.5% tariffs on Chinese cars.
Apple will play a role in the auto sector through its CarPlay software franchise. But right now building EVs is a dangerous game, even for a company worth $2.8 trillion.
