In recent years, the rapid development of China's new energy vehicle market has seen new energy vehicles gradually dominate the automotive landscape. Under these circumstances, domestic new energy vehicles have witnessed a significant surge, not only gradually outpacing traditional joint venture automakers but also narrowing the gap with world-leading manufacturers. Recent news indicates that BYD trails Tesla by only 30,000 units in sales in the pure electric vehicle market, sparking discussions about whether domestic new energy vehicles have truly met global standards.

I. BYD Trails Tesla by Just 30,000 Units in Sales

According to Time Finance, as China's monthly penetration rate for new energy vehicles surpassed the 50% threshold, Chinese automakers who made early strategic moves and rapidly introduced new models have reaped the benefits. Incomplete statistics from ECNS reveal that leading domestic automakers in 2024 achieved varying degrees of sales growth, with some setting new historical highs.

Chinese automakers have employed three primary strategies for sales growth: price wars, product diversification, and overseas expansion. BYD has effectively utilized all three: employing flexible pricing strategies, launching new premium brands like Tengshi, FANGCHENGBAO, and YANGWANG, and extensively entering multiple global markets such as Japan, South Korea, Europe, South America, and the Middle East.

Official data shows that BYD sold 4.2721 million vehicles in 2024, retaining its position as the global sales champion for new energy vehicles without suspense. Part of BYD's sales growth is attributed to the booming hybrid vehicle market in China, with sales of its plug-in hybrid models increasing by 72.83% year-on-year to 2.4854 million vehicles, accounting for nearly 60% of total sales. Compared to the relatively balanced development of both power forms in 2023, BYD's sales began to favor hybrid models last year.

In terms of pure electric vehicles, BYD sold approximately 1.765 million units in 2024, while Tesla delivered a total of approximately 1.789 million vehicles globally throughout 2024.

However, the gap between the two is narrowing, with the annual delivery volume of BYD and Tesla's pure electric vehicles shrinking to within 30,000 units. Moreover, Tesla experienced its first annual sales decline since 2015, with 1.81 million deliveries in 2023. According to the Global Times, Musk had previously predicted a slight increase in Tesla's sales throughout 2024, but they actually declined by 1.1%. The report analyzes that factors such as reduced EU subsidies, American consumers' increasing preference for hybrid vehicles, and intensified global competition have all pressured Tesla's sales. In China, Tesla's second-largest market, the company continued to grow, with sales in 2024 accounting for 36.7% of its global total. Data from Tesla China shows that sales in China increased by 12.8% month-on-month in December, reaching a record high of 83,000 vehicles.

Furthermore, on the 3rd, Chinese media updated the market capitalization of global automakers. As of December 31, 2024, Tesla and Toyota ranked first and second in market capitalization. BYD, which previously ranked third with a market capitalization of US$107.84 billion, was overtaken by Xiaomi, a Chinese company that officially entered the automotive market in 2024, with the latter's market capitalization increasing to US$112 billion. As of now, two Chinese automakers are among the world's top ten automakers by market capitalization.

II. Are Domestic New Energy Vehicles Truly on Par?

Faced with the strong rise of domestic new energy vehicles and the narrowing gap between BYD and Tesla, how should we view the development of domestic new energy vehicles?

Firstly, the rise of domestic new energy vehicles is inevitable given the overall ascent of Chinese manufacturing. In the early stages of reform and opening up, China's automotive industry struggled to get started. Faced with mature foreign automotive manufacturing systems, particularly in precision engine manufacturing, complex transmission tuning technology, and solid chassis tuning skills, domestic automakers found it difficult to keep up. With a century of accumulation, foreign automakers had erected high technical barriers, causing Chinese automakers to remain in the learning and imitation stages for a long time in the core technology fields of traditional fuel vehicles, making it difficult to achieve qualitative breakthroughs, limiting product competitiveness, and allowing foreign brands to dominate a large share of the market.

However, with the development of the times, new energy vehicles have gradually emerged. New energy vehicles focus on battery, motor, and electronic control (collectively referred to as "three electrics") systems. As the energy source for new energy vehicles, the technological development of batteries directly determines key performance indicators such as range and charging speed; efficient and reliable motors guarantee the vehicle's power output; and precise and intelligent electronic control systems coordinate the battery and motor to optimize vehicle energy management. Compared to technologies such as engines in traditional fuel vehicles, "three electrics" technology belongs to an emerging field, with global automakers almost starting from the same starting line.

China boasts a complete industrial system and deep accumulations in fields such as electronics, chemicals, and materials, which can quickly provide robust support for the research and development and production of new energy vehicle "three electrics" technology. For instance, in battery manufacturing, companies like China's CATL have rapidly risen to become global leaders in power batteries, providing domestic new energy vehicles with high-quality, stable, and cost-controllable battery supplies. Simultaneously, in motor manufacturing and electronic control system research and development, domestic enterprises rely on a large number of scientific research talents and industrial cluster advantages to rapidly iterate technology, enabling domestic new energy vehicles to gradually gain independent and controllable capabilities in core components, break free from reliance on foreign technology, and achieve overtaking in curves.

Secondly, profound changes are occurring in the structure of the automotive industry. Currently, established automakers that have long dominated the market are gradually facing difficulties. First, the market share of joint venture vehicles is declining rapidly. Traditional joint venture automakers have long relied on the profit model of fuel vehicles and have been relatively slow in investing in new energy vehicle research and development. On the one hand, their dependence on the profits of existing fuel vehicles makes them lack motivation for transformation; on the other hand, there are coordination difficulties between joint venture partners in strategic decision-making and technology introduction, leading to slow launches of new energy vehicle models and weak product competitiveness. In recent years, the market share of joint venture vehicles in the Chinese market has gradually been eroded by domestic new energy vehicles, with sluggish sales growth and even a downward trend.

Second, established automotive giants are transforming slowly. Established automotive giants like Volkswagen and Toyota, although aware of the urgency of the new energy transition, are struggling with their huge enterprise structures, complex supply chain systems, and traditional thinking inertia in the process of transitioning to new energy. For example, it takes a long time to develop electric vehicle platforms, and the concept of software-defined vehicles is difficult to implement. The development of intelligent driving technology lags behind, making it difficult to quickly adapt to the demands of new energy vehicle consumers for intelligence and connectivity. Compared with emerging domestic new energy automakers, they are slower in responding to the market. In contrast, they lag behind Chinese enterprises in battery technology, intelligent networking technology, etc., putting them at a disadvantage in the new energy vehicle market competition.

In contrast, domestic new energy vehicle manufacturers, such as BYD, Geely, Li Auto, Hongmeng Zhixing, etc., reflect the overall rise and surpassing of China's automotive manufacturing industry in a certain sense. Taking BYD as an example, BYD possesses multiple core technologies in the field of new energy vehicles, such as its self-developed Blade Battery technology, which has unique advantages in safety, energy density, etc. BYD's models cover multiple market segments such as sedans and SUVs, and have achieved good sales performance in both domestic and international markets.

The narrowing gap in sales between BYD and Tesla to 30,000 symbolizes the overall rise of China's automotive manufacturing industry in the field of new energy from a broader perspective. The once seemingly unreachable international benchmark for new energy vehicles is now being tightly pursued by domestic automakers, indicating that China's new energy vehicles have been recognized in terms of technology, products, and markets, breaking the monopoly of foreign brands in the high-end new energy vehicle market, building confidence for China's automotive industry, and showcasing the strength of China's new energy vehicles to the world.

Thirdly, the issues of domestic new energy cannot be ignored. Although China's domestic new energy vehicles have significant advantages, most still follow the route of high cost-performance, and the added value of the overall industrial chain is not high. High cost-performance means providing abundant configurations and functions at a lower price. This strategy helps domestic new energy vehicles quickly gain a foothold in the market and attract more consumers. However, from the perspective of the industrial chain, it also means that enterprises obtain relatively few profits from the sale of each vehicle. For example, in terms of auto parts supply, although China has numerous parts suppliers, many of them can only provide low-value-added parts, with high-end parts still relying on imports or production by foreign-funded enterprises in China.

Moreover, among some new carmaking forces, the phenomenon of losing money on every car sold still exists. These new carmaking forces often invest heavily in brand building, technology research and development, and production facility construction. To stand out in the fiercely competitive new energy vehicle market, they need to continuously innovate in technology, establish their brand image, and build modern production plants and sales networks. However, due to the insufficient scale of vehicle sales, it is difficult to spread these costs, resulting in losses on the sale of each vehicle.

Fourthly, what should Chinese new energy automakers do? Currently, for China's domestic new energy vehicles, everyone's goal should actually be the same, which is to promote the better development of China's automotive industry. Under such circumstances, the most important thing to do is to truly avoid the involution of price wars and avoid ineffective malicious competition. Although price wars may increase market share in the short term, they will damage the healthy development of the entire industry in the long run. Excessive price wars will lead to decreased corporate profits, affecting the company's R&D investment and sustainable development capabilities. Enterprises should improve market competitiveness through differentiated competition, such as innovating in product design, functionality, and services to meet the needs of different consumers. At the same time, enterprises can strengthen cooperation to jointly promote the formulation of industry standards and technology sharing, improving the efficiency and competitiveness of the entire industry.

To promote Chinese automotive brands to truly achieve a global breakthrough, every participant in the new energy vehicle industry needs to promote greater development with a broader mindset and positioning. In particular, it is necessary to continuously focus on innovation, which is the core driving force for the sustainable development of domestic new energy vehicles. Enterprises need to continuously increase R&D investment and promote technological innovation and product upgrades. Especially in battery technology, intelligent driving technology, and Internet of Vehicles technology, more breakthroughs and progress are needed. Only in this way can the sustained competitive advantage of China's new energy vehicles be maintained, and the comprehensive rise of domestic automobiles truly realized.

Therefore, if China's domestic new energy vehicle industry wants to achieve greater global breakthroughs, it must go beyond the simple price competition model, rely on innovation-driven growth and quality to succeed, and truly realize the transformation from "Made in China" to "Created in China", which is the only way to allow Chinese brands to thrive for a long time.

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