Tesla Is The Most Powerful EV Company, But BYD Is The Most Successful At Taking On Telsa

BYD is currently blocked from selling in the US with most other Chinese car makers, but in Australia, the brand competes head-to-head with Tesla. While EV Sales are up in Australia this year by around 3.1%, Tesla is down to date by around 21% (35%+ in November alone), while BYD is up 18%, showing any brand's most vigorous EV growth. Globally, Tesla still leads BYD by a skinny margin of 1% (18.5% Tesla, 17.5% BYD).

While Tesla continues to be the most powerful EV company, it is kind of amazing that the mainstream automakers haven’t had nearly as much success as BYD has. So why is BYD growing not only faster than Tesla but also faster than any of the other more traditional car companies like Ford and GM?

Focus

Years ago, I met with the then-CEO of Ford and several auto analysts, and I told him that if he didn’t get what Tesla was doing, he’d lose his job. The other analysts argued that I was wrong and Ford had the superior plan. Two years later, Ford had a new CEO, and today, they have a valuation that is a fraction of Tesla’s.  Currently, in terms of company valuation, four companies are at the top of the chart: Telsa, Toyota, BYD, and Xiaomi. Ford is ranked 13th.

Three pure-play electric car companies are at the top of the chart, with the most potent branded company, Ferrari, listed as fifth. Only Toyota is among the top four traditional car companies, with around 1/5th of Tesla's valuation. 

What makes these successful EV companies more financially successful is that they are EV-only pure plays. Tesla set the bar. By being EV-only, it provides focus, and it forces the dealership network to come up to speed on EVs and be proficient with them. This is in contrast to most traditional car companies, which lack EV-trained technicians or EV-focused salespeople because they mostly have ICE (Internal Combustion Engine) cars.  

EVs as EVs

One of the big problems with traditional car companies is that they have to leverage their volume platforms. Virtually all of these companies' volume platforms are based on ICE, not EV technology. This means their cars are a high mix of ICE and EV components, providing flexibility in manufacturing but resulting in less-than-ideal EV configurations. 

Mistakes have included Ford taking a Muscle car brand, Mustang, and trying to turn it into an SUV EV brand with the Mustang Mach-e. It is one of the better EVs, but the brand, which goes back to the 1960s, is solidly performance gas car-focused, creating discord when applied to an EV. Someone at Ford doesn’t get branding, and the end result is a nice car with a brand that doesn’t properly reflect what it is. 

Building just EVs allows the company to gain critical EV competence and focus on what makes EVs different and uniquely attractive. Building just a couple of EVs means your design and development teams are mostly ICE-focused, making it harder to roll out consistent marketing and resulting in less-than-ideal EVs. 

The Top EV companies do EVs, and they are focused.

Wrapping Up: The Path To Success

If companies want to be successful with EVs, they need to either switch to them exclusively or spin out a division that is focused on EVs. This is somewhat similar to what was done when firms wanted to develop luxury cars: They came up with new brands like Lexus, Infiniti, Lincoln, and Cadillac (or bought companies that already had those luxury brands).

Tesla has showcased that the path to success is focused on not redesigning ICE cars as EVs but as pure EVs. Granted, the company has a bit of an image problem thanks to Elon Musk, but its focus and execution have just been better than the traditional car companies. BYD and Xiaomi have appeared to be mimicking Tesla’s approach. With lower manufacturing and parts costs and better-than-Telsa-level build quality, they are growing in EV sales faster than any other company, including Tesla, at the moment. 

This reminds me a bit of the traditional cell phone companies and the Apple iPhone. They decided that Apple’s approach was a joke, which it wasn’t, and Apple effectively took the smartphone market from them, forcing Palm out of business, Microsoft out of the market, nearly wiping out Nokia, and ending Blackberry as a Smartphone company. 

BYD is becoming a better Tesla than Tesla, which is why it is winning; other car companies could learn much from BYD.     

Rob Enderle is a technology analyst at Torque News who covers automotive technology and battery development. You can learn more about Rob on Wikipedia and follow his articles on Forbes, X, and LinkedIn.