According to a recent analysis by UBS Research, Chinese electric vehicle (EV) makers, including Tesla and BYD, are poised to continue their dominance in the global auto industry. UBS predicts that these manufacturers will undercut traditional car brands by leveraging their advanced electric technology and efficient manufacturing techniques.
UBS conducted a detailed evaluation of the upcoming BYD Seal electric sedan, taking into account core engineering and estimated manufacturing costs. The results reveal that BYD enjoys healthy profit margins in Seal, which it can use to increase its market share. The report estimates a 16% profit margin for BYD Seal, primarily due to BYD’s in-house manufacturing capabilities, especially the LFP battery, which offer cost advantages compared to legacy automakers.
Compared to a Tesla Model 3 made in China, UBS estimates that the BYD Seal is around 15% cheaper to manufacture. However, Tesla’s control over its own software, an area most brands outsource, allows it to maintain the same profit margin per vehicle.
This emerging dominance of Chinese EV manufacturers poses a major challenge for traditional car brands such as Volkswagen and Toyota. UBS predicts that these brands could lose 20% market share due to fierce competition from Chinese electric car brands. In addition, UBS predicts a doubling of the global market share of Chinese original equipment manufacturers (OEM), rising from 17% to 33% by 2030.
Besides cost advantages, Chinese manufacturers like BYD have the advantage of bringing cars to market quickly. While traditional brands usually take four years or more to introduce new models, BYD achieves the same result in almost half the time, thanks to different development cycles and speed to market.
Despite Tesla’s ambitious goal of selling 20 million cars a year by 2030, UBS predicts that the company will gather only about 8% of the total electric vehicle market. However, this would still place Tesla as a dominant player in the global car market, with estimated annual sales of seven million cars.
UBS concluded that Chinese electric vehicle makers, led by Tesla and BYD, will continue to expand their global market share as EV penetration increases, while traditional automakers struggle to compete.