Simplicity Versus Audacity: BYD & Tesla Take Slightly Different Paths
The world needs as many affordable EV models to be made available as quickly as possible to displace a lot more internal combustion vehicles from new vehicle sales. That means we need more automakers to ramp up development and production of these more affordable EVs that could be the equivalent of a Toyota Corolla, a Honda Civic, or an electric truck priced like the Ford F-150. We need to get there sooner rather later. I just read a brilliant article from Jennifer Sensiba, and it got me thinking of how the transition to electric mobility is evolving.
Right now, we have two giants in the game — Tesla and BYD — and it looks like they have elected to take slightly different paths to get us to where we need to be. Tesla has led the industry and is currently the world’s largest producer of full battery-electric vehicles, but BYD is catching up fast! Last quarter, they both sold more than 400,000 battery-electric vehicles (BEVs), with Tesla just edging it. Tesla delivered 435,059 BEVs and BYD delivered 432,603 (yes, excluding BYD’s PHEVs). Q4 will be interesting in this friendly sales contest.
The Model Y is on track to be one of the top selling vehicles worldwide across all drivetrains, if not the top selling vehicle. However, Tesla still has essentially four vehicle products that you can purchase in some of the top vehicle markets around the world. These are the Model 3, Model Y, Model S, and Model X. Next month, deliveries of the highly anticipated Cybertruck begin, albeit in limited volumes, according to Tesla. Jennifer explains and summarizes the reasons behind the slow ramp-up nicely in her article — below is a snippet, but you can go read the full article for more.
During a recent conference call, Elon Musk dropped a bomb, and not one that was good for the company. In it, he explains that the production ramp for Cybertruck is not going well, even almost four years after the announcement. Why? Because he did not want to make a “distinction without a difference” product for Tesla’s first truck, and instead wanted to make something “radical and innovative” and “special.” It is apparently proving to be a lot harder than the Model X or Model 3/Y ramps were.
“We dug our own grave with Cybertruck,” Musk said at one point. Deliveries are still going to begin soon, but only at very low volumes. He does not anticipate reaching full production volume until sometime in 2025.
So instead of a more traditional approach to the pickup, which would have potentially accelerated the arrival of a mass market electric truck, Tesla went for a moonshot, or in this case, more appropriately, a “Mars shot.” Tesla went for an audacious product that is much harder to scale. Of course, such products are always needed, as without such moonshots (or Mars shots), we would not have had as much progress as we have managed to up to now.
As an example, we can look at Tesla in terms of vehicle product portfolio as being similar to the era where some players like BMW essentially had three models or so — i.e. the 3 Series, 5 Series, and 7 Series — with a few other lower-volume, higher-value products.
On the flip side, you have BYD. BYD has gone for simplicity, if we can call it that. BYD now has the widest range of full battery-electric vehicle models in the world, ranging from the $10,000 BYD Seagull to some fancier Denzas priced above $50,000, and then also the new YangWang range that will be priced round $150,000. This includes the YangWang U9 Supercar. With around 1,084 hp and an impressive 0–100 km/h acceleration of 2 seconds, the U9 looks like it will be quite a compelling vehicle. Of course, Tesla is also working on the new Roadster as well. With such a wide range of products, BYD is sort of like a Toyota, serving customers in the small hatchback segment as well as having more premium products (Lexus and Toyota Crown VIP Majestas, etc.).
Let’s look at how quickly the BYD Seagull has scaled. It quickly ramped up since launch a few months ago, and sold over 30,000 units last month alone, in one market — China. The Seagull is a “simple” electric hatchback and can be scaled amazingly fast, as we can see. Now imagine if BYD really steps up and aggressively starts to export the Seagull globally.
The audacious, revolutionary, and ground-breaking Cybertruck will have an initial annual production capacity of just above 125,000 units. To put that into perspective, about 60,000 Toyota Hilux pickups are sold in South Africa each year, and a similar number in Australia. Therefore, the initial capacity of 125,000 units of Cybertruck is essentially the production to supply only two markets the size of South Africa and Australia. This is excluding sales of other popular pickups, such as the Ford Ranger and the Isuzu D-Max, in those markets. This number is also far below what Ford’s F Series of trucks sells in the US per year (about 600,000).
BYD also has some groundbreaking products coming up, such as the “floating U8 SUV” equipped with some other cool tech, but it has elected to have more balance. It has the simple hatchbacks such as the Seagull and the Dolphin as well as some adventurous vehicles.
What do you think? Do you think Tesla could have started a simple hatchback “Model 2” project in 2019, which would be going into production right about now, and go on to sell a couple of million of this model each year? Could this have been prioritized as a more scalable model? Battery supply constraints have been cited as one of the main hurdles for such a project at the time. However, with supply chains improving now, had such a model been production-ready by now, would a more balanced product portfolio approach paired with a more conservative roadmap for such a complex and quantum-leap product like the Cybertruck have resulted in Tesla having more room to expand its global reach faster? Let us know in the comments section.
There are a whole lot more people who can afford a Toyota Corolla than there are those who can afford an E-Class priced car. We need more affordable, high-volume models on the market as soon as practically possible. It looks like we are starting to get there, as more automakers are starting to roll out more BEV models in various places around the world.
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