Warren Buffett-Backed BYD Seeks Tesla's Support Amid Tough Competition In China's EV Market: 'Brands That Aren't Able To Compete...Will Be Eliminated'

Warren Buffett-backed, China’s leading battery and electric vehicle (EV) manufacturer, BYD Co Ltd BYDDY BYDDF, is bracing itself for tough competition in the country’s EV market over the next two to three years and is keen to work with Tesla Inc TSLA.

What Happened: BYD, a company that has witnessed significant growth and outperformed Tesla in total vehicle production in 2023, is geared up to face the escalating competition in China’s EV market, CNBC reported on Tuesday.

Yunfei Li, the General Manager of Branding and Public Relations at BYD, stated in a press conference on Monday that the competition has resulted in the lowest worldwide prices for EVs. He further implied that brands unable to keep up with the competition would falter in the coming years.

"I think this is an inevitable process, but it may take another two to three years," he said.

"In the end, many brands that aren't able to compete in the market will be eliminated."

Li expressed admiration for Tesla, acknowledging its substantial contribution to the global EV market’s expansion. He also affirmed that Tesla is a client of BYD.

"I think this market is very large. It's not that we must surpass them or they must surpass us. Instead, BYD and Tesla together, or more new energy vehicle brands together, we need to think about how to increase the new energy vehicle ‘cake,'" Li said.

See Also: Could Lucid Motors Power James Bond's Next On-Screen Car? How Elon Musk Rival Could Beat Bond Fan To 007'

Elon Musk, CEO of Tesla, also acknowledged BYD as a Tesla supplier during an earnings call last week.

Why It Matters: The EV market in China has witnessed a swift expansion, with new energy vehicles making up more than a third of new passenger cars sold in the country last year. Government incentives and license plate restrictions, coupled with new technology from startups and traditional automakers, have propelled sales.

BYD, with its various sub-brands catering to different consumer price segments, expects to be one of the few profitable companies in this intensely competitive landscape. Earlier this month, the company announced an investment of over $14 billion in vehicle intelligence and NEV evolution.

BYD disclosed in a filing with the Shenzhen Stock Exchange on Monday that it likely saw a minimum profit increase of 74% last year, amounting to between 29 billion yuan and 31 billion yuan ($4.09 billion to $4.37 billion).

However, Tesla reported a 15% decline in gross profit for 2023, with China contributing to approximately 22% of the company’s revenue. Despite the decline, BYD has been making significant strides in its global expansion with the launch of its first chartered cargo ship, the “BYD Explorer No. 1,” carrying 7,000 vehicles to Europe.

Meanwhile, Buffett’s Berkshire Hathaway has been trimming its stake in BYD. In late November, it was reported that the company sold about 3.23 million Hong Kong-listed shares of BYD for HK $630.33 million ($80.7 million).

Read Next: Tesla Alienates Investors With Sketchy Near-term Outlook, Rivian’s Rumored R2 Global Premiere, Canoo On A Roll: Biggest EV Stories Of The Week

Image Via Shutterstock