NEW YORK (CNN) — The world's most important automaker is now a Chinese-owned company backed by Warren Buffett, putting Elon Musk in a tough spot.
BYD, the automaker Musk once laughed at, overtook Tesla late last year to become the world's top-selling electric vehicle manufacturer. (Tesla overtook BYD in the first quarter of this year, but the two remain neck and neck.) And now BYD is closing in on Toyota, unveiling a new hybrid powertrain that BYD says can get you from New York to Miami without refueling.
it is 1,300 miles That's hundreds of miles more than the standard range of other hybrids on the market — the world's major hybrid-car makers typically cap their range at just over 680 miles, according to The Wall Street Journal.
BYD's Hong Kong shares jumped more than 5% on Wednesday.
All of this is important for a few reasons.
First, while Tesla is the best-selling EV in the U.S., it's losing market share overseas to foreign competitors that can make cheaper cars, and second, despite being an EV pioneer, Tesla hasn't unveiled any major innovations in recent years that would justify its high price tag.
That's why BYD, which makes both electric and hybrid vehicles, has now overtaken Tesla on the global stage.
China is the world's largest auto market and BYD overtook Volkswagen to become the country's top seller last year.
In addition, BYD's sedan cheap. Pricing for both models with the new drivetrains starts at about $14,000 (by comparison, the Toyota Prius, America's best-selling hybrid, starts at $28,000).
BYD's evolution from a small junk manufacturer to a major global brand has surprised skeptics, including Musk, who completely dismissed the company in a 2011 interview with Bloomberg.
During the exchange, Musk responded with a smug chuckle to a straightforward question about whether BYD could compete with Tesla.
“Have you seen their cars?” he asked the interviewer rhetorically. When pressed further, he made it clear that he didn't think BYD's products were “particularly compelling” and that its technology was “not that powerful.”
Of course, a lot has happened in the decade since, and Musk backtracked on an earnings call in January this year, saying Chinese EV makers “could pretty much destroy most other auto companies in the world” unless stronger trade barriers were put in place. (That was two weeks ago.)
Meanwhile, BYD has another advantage that Tesla doesn't have: it makes hybrid vehicles.
Hybrids like the Prius were meant to be a short-lived stepping stone to an all-electric future, but in the United States, at least, electric vehicle sales have been sluggish, in part due to a lack of infrastructure to support them on the nation's roads.
EV range has come a long way — most cars can go more than 300 miles on a single charge, which is more than most people drive even in a conventional car before it has to stop. The problem is, there just aren't enough charging stations along roads and within cities to make customers comfortable with the idea.
The top reason U.S. customers aren't considering buying an EV is the lack of charging stations, cited by 52% of consumers in a recent J.D. Power survey.
Instead, we have a car that is significantly cheaper than an EV, reduces fuel costs in the long run, and is very Slightly They are more environmentally friendly than regular engines. (Emphasis on “slightly”: hybrids still run on fossil fuels and aren't helping the world reach its climate goals as much as mass adoption of EVs would.)
For now, Tesla and other U.S. automakers are heavily protected from Chinese competition by stiff tariffs and major regulatory hurdles, but it's unclear how long that protection will last once American consumers start seeking cheaper options available overseas.
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