The competition in the car sector, especially on the electric segment, has intensified strongly this year. The China market, which represents over one third of the world, but over half of that of electric cars, has become a major land between the strong brands of the world.
Byd reduced prices by 30% in spring. Photo archive
According to estimates of the Nomura Financial Group, the price of cars in China has decreased by 19% in the last two years, until spring, trend that has accentuated in the last two quarters, after the actions of the BYD technological giant.
The price drops operated by the byd in March, some reaching 30%, meant a shock wave for local and foreign competitors. Some companies came with their own reply, others, like Tesla, preferred to wait, paying the price through unrealized sales. The pressure, however, could not be ignored, pushing towards action. Recently, Tesla decided to descend the price for a version of model 3 in China by 3.7%.
The War for the market share “fly“From the profits of the companies, as the recent results of the BYD. The last 12 months, the net profit margin reaches 4.9%.
It is, however, better than in the case of Mercedes-Benz, with 2.7% margin in the last quarter, although the value for the last 12 months is a similar one, of 4.9%. With all the difficulties, at the global level Tesla is better at the profitability margin, with 5.2% quarterly and 6.2% annually. In any case, these figures are an image of the past and are threatened by the current trends, stresses the XTB Romania analyst, Claudiu Cazacu.
Customs taxes bring orders below expectations for Tesla
The launch of Tesla in India was below expectations: only 600 orders for its models, effect of high customs and stresses between the two countries. In California the market share of Tesla for electric vehicles decreased to 52.5%, and sales plunged by 12% compared to the previous year, and this before processes that could even break the sales of the company.
Tesla sold 67,886 vehicles made in China in July, down 5.2% compared to June and 8.4% compared to July 2024. The Shanghai factory produces the 3 sedan model and the Y. BYD also had a weak July, but it returned on growth, it is straight, marginal, 0.1% in August.
For byd, the increase of sales outside China's borders was the ascent engine. Very good results were recorded in Europe, while Tesla was on an opposite slope.
In Europe, including the United Kingdom and EFTA countries, Norway, Iceland, Switzerland and Liechtenstein, Tesla sales decreased by 40% to 8,837 units in July, while the Byd performed spectacularly, with a 225% jump and sales of 13,503 cars, points out the consultant.
The rapid braking of Tesla is not only about the aggressive entrance to the market of other brands, but also the collateral costs of Elon Musk's public positions. It remains to be seen to what extent the withdrawal from the political advance will allow the sales to relaunch, given the strong competition of Chinese cars, but also the lack of very fresh models. In fact, the European market share of China brands has reached a record level of 5%, supported by a wide range of new models, fast loading technology and competitive prices despite customs duties.
The Chinese giant, a position of force in the competition
BYD, on the first place as sales in China, has the advantage of starting as a battery developer, an essential component of electric vehicles, and subsequently made a wide range of products, from compact class vehicles to luxury or even buses. By controlling a large part of the supply chain, the company maintains low costs.
The manufacturer is in a relative position, not only against Tesla, but also towards some European or local competitors, but this does not mean that it can avoid some financial consequences of the market strategy. His shares lost 8% months in China after announcing the results. Investors do not look too patient with the strategy of setting prices that could, however, bring the advantages to the long -term company.
Since the beginning of the year, the advance has been adjusted to 21.8%. Compared to Tesla, however, the course on the stock exchange is a major achievement. Reflecting the tendency of sales and general concerns, Tesla shares lost 12% this year. The market value of both companies is approaching 1 trilion, except that the currency is the dollar for Tesla and the Yuan for the ESD, meaning that Tesla's market value is actually over 7.13 times higher.
Some investors have retained a high level of confidence in new business lines promoted with enthusiasm by the Musk CEO: robot taxis, energy storage or optimus humanoid robots. Public communication seems to want to move attention from the current serious difficulties in the “Classic” car segment to new, profitable and growing directions, Claudiu Cazacu shows.
However, the current trends raise question marks on the main business line, and an additional margin compression is expected, in relation to the similar quarters of last year. We will need new, substantial and credible ads to restore a durable appetite for Tesla titles. Meanwhile, beyond the current volatility, the BYD profits are expected to grow by almost half next year, anchoring the stock market assessments.
