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Opinion
Why Tesla fell behind BYD, and why catching up won’t be easy
Vast economies of scale, tightly integrated supply chains and China’s control over key materials give Chinese EV makers a systemic edge
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Mark Greeven is professor of management innovation and strategy and dean of Asia at IMD, where he co-directs the Building Digital Ecosystems and Strategic Partnerships programme and the Strategy for Future Readiness programme.
China’s BYD has pulled ahead of Tesla, becoming the world’s biggest maker of fully electric vehicles (EVs). The shift reflects more than the fortunes of the two companies. Tesla’s dethroning shows how China’s EV sector, built around dense supplier networks, fast iteration and strong policy support, is setting the pace for the rest of the world.
The shift is even more notable considering that BYD was barely known outside China a decade ago. Now BYD is outpacing its competitors, delivering more than 595,000 battery EVs in the fourth quarter last year to outstrip Tesla’s 495,000.
The timing of the US carmaker’s dethroning matters. Chinese EV makers face steep tariffs in the United States and other parts of the West, leaving little room to sell there, but they are gaining footholds in markets such as South Africa and Brazil. That BYD has pulled ahead despite these barriers shows how resilient China’s system has become.
Tesla’s latest results, out last week, underlined the shift. Its revenue fell 3 per cent year on year in 2025, the first drop in annual revenue in its history, highlighting how the EV market is tilting towards China.
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