Jonathan Wong BYD's Hong Kong-listed shares rose 2.65%, reflecting broader strong sentiment in the IT sector, with the Hang Seng Tech index rising 2.84%. (Photo: Rodrigo Garrido/Reuters) Chinese electric vehicle (EV) manufacturer BYD is rapidly closing the gap with global leader Tesla, reporting record-breaking sales of 1.76 million vehicles in 2024. BYD's December sales of 207,734 EVs, powered by strong domestic demand and government subsidies, marked a 41% year-over-year increase. This performance positions BYD as Tesla's most formidable rival in the global EV market. Tesla, which has long dominated the EV sector, is expected to report sales of around 1.8 million vehicles for 2024. The narrow margin between the two companies underscores the intensifying competition as BYD leverages its hybrid models and aggressive pricing strategies to gain ground. BYD's dominance in China, where it sells 90% of its vehicles, has been a key factor in its rise. Government subsidies, combined with competitive pricing, have spurred consumer demand, enabling the company to outperform foreign brands like Volkswagen and Toyota in its home market. The Shenzhen-based automaker has also surpassed traditional competitors in revenue, outpacing Tesla in the third quarter of 2024 with 200 billion yuan ($28.2 billion) compared to Tesla's $25.2 billion. Despite its strong domestic foothold, BYD faces challenges in expanding its global presence. High tariffs in key markets such as Europe and the United States have limited its international growth. In October, the European Union imposed tariffs of up to 45.3% on Chinese-made EVs, while the United States has implemented a 100% duty on EV imports from China. President-elect Donald Trump's incoming administration is expected to introduce additional trade restrictions, further complicating BYD's overseas ambitions. BYD's efforts to expand into emerging markets have also encountered setbacks. In Brazil, its largest international market, authorities halted the construction of a BYD factory in December, citing labor violations. Workers at the site were reportedly living in conditions described as akin to "slavery." BYD responded by severing ties with the construction firm involved and reaffirming its commitment to compliance with Brazilian labor laws. Meanwhile, Tesla remains ahead in global EV sales, benefiting from a more established international footprint. However, the American automaker has not been immune to challenges. Price cuts aimed at boosting demand have pressured Tesla's profit margins, while competition from domestic and international brands has intensified in markets like Europe and China. Traditional automakers are also feeling the impact of the EV revolution. Volkswagen, for instance, recently negotiated a deal with Germany's IG Metall trade union to avoid plant closures, signaling the pressures legacy automakers face in adapting to a rapidly changing industry. Similarly, Honda and Nissan have entered merger talks to counter growing competition from Chinese EV manufacturers. © 2024 Business Times All rights reserved. Do not reproduce without permission. More From BusinessTImes