Tesla and Competitive Threat from the Chinese BYD Company

Tesla’s Competitive Threat from Chinese BYD Company

Chinese Electric Vehicle (EV) firm BYD continues to grow extensively in the local and global market, which has become a threat to Tesla. Statements by Tesla CEO Elon Musk highlight the expansion of market dominance in China by BYD, which has led to its company's reduction in sales. Further, the focus on global expansion by BYD is an underlying problematic issue that reveals its expansion of dominance in the external markets. Especially in regions with minimal trade barriers, BYD is bound to dominate the market. Hence, Tesla will struggle to deal with market dominance due to BYD's low prices, quality vehicles, and liberalization of the EV sector as enabling factors.

BYD's Low Pricing Strategy

The Chinese global commitment to environmental conservation has enabled BYD to deploy a pricing approach. Accordingly, the company enjoys government subsidies and tax breaks (Gao, 2021). Most importantly, the government has effectively deployed consumer incentives (Fu & Barbieri, 2024). With the company surpassing Tesla as of March 2023 as the global top EV maker in terms of sales, the inherent government policies have effectively implemented BYD's low prices.

The support for BYD has become a crucial tool for waging an ongoing price war with Tesla. Accordingly, as of the start of 2023, the company launched a new version of its popular car in the home market at a lower price than the previous model (Hao et al., 2023). With the new sticker for the new Yuan Plus being sold as Atto 3 within the external markets being $16,644, which is 12% less than its predecessor, it is apparent that it is at an affordable price point (Hao et al., 2023). At the end of 2023, the company sold over 400,000 models, reaching at least a quarter of the export market (Zhu, 2023). This indicates that the pricing is customer-friendly, thus the high number of sold products.

Hence, the company's focus on the home and international markets is built upon broadening the market share and ascertaining brand dominance. An implication is the extensive pressure on Tesla, which has a market in China and is still afraid of the potential entry and dominance of US consumers by BYD (Jiang & Lu, 2023). Additionally, Tesla's recognition of the potential for rivalry has been evident from the ongoing incentives to promote popularity across the Chinese market (Fu & Barbieri, 2024). Tesla adopts collaborative practices to implement discount deals to woo the expansive Chinese population (Gao, 2021). Nonetheless, Tesla has yet to be effective due to the delays in product launch and the minimal support from the Chinese government.

With the Chinese market being the first sign of Tesla's dwindling market share struggles, the low-pricing approach has been practical for BYD. As Tesla attempts to tinker with its prices to ensure the best point to maintain customer dominance and acquisition, BYD has already established its pricing strategy (Mu, 2023). For example, in April 2024, the company announced that it would sell its new hatchback Seagull electric at $10,000. The announcement shocked Tesla because it focused on its venture to the European market for its cheap EV (Fu & Barbieri, 2024). An implication is that the push to Europe is driven by the need to ascertain market position due to quality and affordability. The focal point of the company's operations is the recognition of undercutting its competitors to establish a market position (Gao, 2021). Central to decision-making is regularly improving its technologies while ensuring the pricing strategy does not change.

Liberalization of the EV Market

Liberalizing the EV sector is an enabling prospect to ensure BYD outpaces Tesla. Mu (2023) emphasizes that the ongoing open market promotion, especially in developing nations such as Brazil, provides an enabling environment for market entry. The prospect of BYD demolishing its global rivals due to the minimal trade barriers translates into open competition that is not driven by significant impediments (Gao, 2021). The US EV market leader, Tesla, faces considerable challenges in venturing into global markets due to the supply chain cost and minimal subsidies. Hence, operating in new markets requires advocacy to reduce trade barriers and promote an enabling platform for price-led competition (Hao et al., 2023). Tesla has yet to focus on mass customer acquisition in diverse markets. Most of the cars are luxury-priced, which translates into barriers to competing in the liberalized setting with BYD.

Thus, the Chinese government has been on the front step in maintaining collaborative relationships with other markets, such as the EU, to ascertain lucrative environments to sell BYD vehicles. Recognition of the globalized marketplace and the value that emanates from positive economic relationships is within the purview of operations (Fu & Barbieri, 2024). Of critical concern is the recognition of the Tesla Company on the ongoing potential headway that BYD continues to make in the liberalized areas. For example, in France and the Netherlands, the promotion of minimal tariffs for EV companies makes it a prudent region for investment (Jiang & Lu, 2023). Capitalizing on policies to encourage the public to purchase EVs has led to an enabling platform for BYD to continue to engage in contract negotiations and trade.

Moreover, BYD has strategically invested in an effective supply chain in the post-pandemic environment. Situational awareness about the advanced technologies that will improve the brand of the company has been capturing customer interest in developed and developing nations (Gao, 2021). The location of BYD's headquarters in Shenzhen, a globally recognized technological center, makes it strategically acceptable across diverse markets (Hao et al., 2023). The gleaming models the company displays manifest the company's focus on global dominance.

Hence, globalization and the promotion of open market operations provide a foundation for BYD to expand its operations. The company's technological competence and government support provide the necessary factors to boost its focus on the international setting (Mu, 2023). Irrespective of the level of economic development, BYD can venture and ascertain domination in divergent settings (Gao, 2021). Especially due to the government subsidies, BYD's supply chain potential is bound to pose a considerable threat to Tesla's global dominance.

Quality Vehicles

BYD has over two and a half decades of operations in battery manufacturing. Since its establishment in 1995, the company has been focused on research and development to ensure advanced products are launched into the market (Hao et al., 2023). Hence, with numerous years of experience in the battery sector, transitioning into the low-cost electric battery supply was manageable (Jiang & Lu, 2023). Most importantly, the industry leadership in the production of advanced technologies drove the venture into the development of EVs.

Consequently, the innovative Blade Battery is a significant enabling factor for BYD's electric cars. Deemed as one of the safest EV batteries, the company's product meets global standards. Having undergone considerable safety tests and design assessments, the ongoing recognition within the industry has led to its ongoing popularity (Gao, 2021). Most importantly, the production of the batteries is aligned with maximizing strength, life cycle, and mileage. The company's objective has been to promote dependability and ensure the batteries are better quality than Tesla's. The company has effectively ensured that the EVs benefit from the e-platform's 3.0 structure, whose design improves the strength, safety, and consumer driving experience (Fu & Barbieri, 2024). The operational mission and vision of the company is to create vehicles that consistently challenge the rivals in quality metrics. Ensuring that each production cycle meets diverse milestones in the quality metrics has led to increased sales. For example, the company was the first to mass produce the 8 in 1 electric power train (Fu & Barbieri, 2024). The design optimizes energy efficiency while providing the buyer with sufficient space. Navigating the quality parameters has led to vehicles that can challenge the global EV market while enhancing its market position.

Equally relevant has been ensuring that it can compete with Tesla regarding the period the battery can last on a full charge. Zhu (2023) emphasizes that both EV manufacturers maintain an estimated 350 to 400 miles on a full charge, which is commendable progress in ascertaining market dominance. Additionally, BYD has been strategic in ensuring fast public chargers are available that are quick to boost the vehicles' power. The interplay of convenient at-home charging and access to rapid chargers on diverse stations translate into the efficient performance of BYD's vehicles (Mu, 2023). Acknowledgment of the efforts of the company to stick to its quality parameters has led to its yearly increase in sales.

Quality BYD's EVs focus on low-cost strategy and leverage market liberalization, which are enabling factors that will pose a threat to Tesla's dominance. Sticking to the strategic approaches reveals the ongoing rise in the market share of BYD in China while diluting Tesla's sales levels. As the company recognizes the value of international expansion, enabling factors will ascertain ease in the market entry into diverse settings.