Electric vehicle maker Tesla has lost its crown as the world’s largest EV seller to China's BYD, despite reporting record quarterly sales in the fourth quarter of 2023, heating up competition in the market.
This could prompt the Texas-based company to announce more price cuts for its vehicles as it attempts to get back in the driving seat, according to industry experts.
The Texas-based company sold 484,507 vehicles in the October-December period, an annual increase of about 20 per cent. Despite a better-than-expected deliveries, it was fewer than the 526,409 EVs sold by BYD in the same period.
Analysts had expected Tesla to announce deliveries of 477,000 vehicles for the final quarter of 2023, according to StreetAccount's compilation of estimates as of December 28.
Shenzhen-based BYD sold 525,409 battery-powered EVs in the fourth quarter, marking its first three-month period when its battery EVs sales outnumbered Tesla's deliveries.
BYD makes both hybrid and battery-run EVs while Tesla produces only the latter.
“I don’t think the price cuts are over, mainly for the reason that demand is still weak. Pricing is a key factor that could help Tesla make up for a possible demand drop and boost revenue,” said Jesse Cohen, senior analyst at Investing.com.
In one of its latest rounds of price cuts announced on October 5, Tesla slashed the prices of its Model 3 and Model Y vehicles in the US by up to 4.2 per cent, according to its website. It was its seventh price cut last year.
“As such, I would not be surprised if Tesla seeks further price hikes in the weeks ahead as trouble starts to brew at some of its competitors, including Lucid Motors and Rivian,” Mr Cohen said.
“At this point, it is clear that Tesla is embarking on a more dynamic way of pricing EVs that other manufacturers would have to follow as [co-founder and chief executive] Elon Musk seeks to balance the fine line between driving sales growth and protecting margins.”
However, despite trailing in the fourth quarter, Tesla maintained its lead over BYD in terms of total annual sales of battery-only EVs last year.
It sold more than 1.8 million vehicles last year, an increase of about 38 per cent from 2022, meeting the goal it announced during an October conference call.
However, the goal was revised down from a sales target of two million announced in January 2023.
In comparison, Warren Buffett-backed BYD produced more than three million vehicles last year, including both hybrid and battery EVs. It sold 1.6 million battery EVs and about 1.4 million hybrid cars.
On Tuesday, Tesla said it produced 494,989 vehicles globally in the fourth quarter, up 12.5 per cent on an annual basis. It manufactured more than 1.84 million units (35 per cent up) across the entire year.
Tesla's shares closed 0.02 per cent down at $248.42 at market close on Tuesday, giving it a market value of $778.42 billion. However, it surged by 0.11 per cent in after-market trading.
The US car maker's shares have surged by about 130 per cent over the past 12 months.
BYD's latest accomplishment serves as a reminder of the obstacles confronting Nasdaq-listed Tesla, analysts said.
“As BYD has accelerated into the fast lane, it's fresh evidence of just how competitive the EV market has become and how hard it will be for Tesla to swerve back to head the pack,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, was quoted as saying by BBC.
What Elon Musk has to say on diminishing performance
Tesla reported a 44 per cent drop in its third-quarter net income, driven by a dip in vehicle deliveries. Production was affected due to “planned downtime” at the car maker's factories.
“At the risk of stating the obvious, it is not possible to have a compound growth rate of 50 per cent forever, or you will exceed the mass of the known universe,” Mr Musk said about the 2024 sales outlook during the last earnings’ call in October.
“But I think we will grow very rapidly, much faster than any other car company on Earth by far.”
Tesla is expected to announce its financial results for the fourth quarter of 2023 on January 24.
Difference between Tesla and BYD
Tesla only offers EVs that are powered solely by batteries whereas BYD, founded in 1995 as a rechargeable battery maker, deals with cars, rail transit, new energy and electronics, with more than 30 industrial parks in China, the US, Canada, Japan, Brazil, Hungary and India.
The majority of its vehicles are priced cheaper than Tesla's and are available in hybrid versions. Its vehicles are currently marketed and sold only in Asia and Europe, and have yet to be introduced to the North American market.
Last month, it teamed up with Amazon Web Services, the world’s biggest cloud services provider, to boost its network of connected vehicles and push its global expansion.
Booming EV market
The car industry's transition to EVs is accelerating. By 2030, more than one in four new passenger cars sold will be an EV, according to S&P Global Mobility report.
The top car makers are expected to account for more than 70 per cent of global EV production by 2030 (compared with 2022 when they represented only 10 per cent of all EV manufacturers), it said.
Last month, the billionaire co-founder of Xiaomi unveiled the company’s first EV, announcing ambitions to become a top global car maker in 15 to 20 years and compete against Tesla and Porsche
In November Tesla, which went public in 2010, delivered its first Cybertrucks, four years after the futuristic vehicles first made their debut.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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COMPANY PROFILE
Name: Xpanceo
Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
Based: Dubai, UAE
Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
Investor: Opportunity Venture (Asia)
if you go
The flights
Air Astana flies direct from Dubai to Almaty from Dh2,440 per person return, and to Astana (via Almaty) from Dh2,930 return, both including taxes.
The hotels
Rooms at the Ritz-Carlton Almaty cost from Dh1,944 per night including taxes; and in Astana the new Ritz-Carlton Astana (www.marriott) costs from Dh1,325; alternatively, the new St Regis Astana costs from Dh1,458 per night including taxes.
When to visit
March-May and September-November
Visas
Citizens of many countries, including the UAE do not need a visa to enter Kazakhstan for up to 30 days. Contact the nearest Kazakhstan embassy or consulate.
ALRAWABI%20SCHOOL%20FOR%20GIRLS
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Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
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A little about CVRL
Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.
One of its main goals is to provide permanent treatment solutions for veterinary related diseases.
The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.
Places to go for free coffee
- Cherish Cafe Dubai, Dubai Investment Park, are giving away free coffees all day.
- La Terrace, Four Points by Sheraton Bur Dubai, are serving their first 50 guests one coffee and four bite-sized cakes
- Wild & The Moon will be giving away a free espresso with every purchase on International Coffee Day
- Orange Wheels welcome parents are to sit, relax and enjoy goodies at ‘Café O’ along with a free coffee
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
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