How BYD Dethroned Tesla as the World's #1 Electric Vehicle Maker

BYD’s initial market presence was met with skepticism; however, BYD has shown the world that it can achieve a level of success hitherto considered impossible, becoming the dominant player in electric vehicles (EVs) globally. This article outlines the complete journey of BYD from being just another battery manufacturing operation at the very bottom of the food chain to being an undisputed leader in the EV market.

In addition, there are many important business lessons that all entrepreneurs can learn from this journey.

Table of Contents

The Underdog Nobody Believed In

Back in 2021, analysts dismissed BYD (Build Your Dreams) as no match for Tesla and laughed at any suggestion to the contrary. After all, Tesla had at that time one of the most well known tech visionaries, Elon Musk, at the helm and an almost cult-like following for its brand; Contrast this to BYD with Wang Chuanfu, their CEO — he was known as being the opposite of Musk, being incredibly modest and lacking the experience of building vehicles or any other sort of consumer product (he is a chemist).

And the numbers seemed to confirm the mockery. In 2021:

Metric	Tesla	BYD
Cars Sold	930,000	590,000
Revenue	$53 Billion	$32.75 Billion

Let’s move to the future, it’s 2024, and everything’s changed. This year, while Tesla reported income of $97.7 billion, BYD reported more than $107 billion — becoming both the largest worldwide seller of EVs (electric vehicles) and, for the very first time, reporting more total income than Tesla. Important point: about $85.6 billion of BYD’s $107 billion came from automobile sales, compared to £77 billion for Tesla. This is partially due to BYD reporting the sale of a significant amount of electronics and mobile phone-related components, which contribute about 20% of income ($21 billion). No doubt regarding the factual accuracy regarding BYD’s first victory over Tesla at large. And it also happens that Warren Buffett (who had made investments in BYD when no one thought it could make it) had, in fact, been right.

Berkshire Hathaway purchased a small stake in BYD for $230 million in early 2008, representing around 10% of the company’s stock; it sold all its shares by the end of 2025, resulting in a total profit of $669 million at a 30x ROI.

The Origin Story: Batteries, Not Cars

This story is not about Silicon Valley; rather, it begins in a time before creation. In 1995, the only players in the global battery industry were Japanese companies, such as Sony and Sanyo, and entering this space required an initial investment of more than $1.7 million (USD). Only wealthy entrepreneurs could afford this great sum.

Wang Chuanfu would prove to be an exceptional man despite not initially appearing to be so. He grew up on a poor farm in Anhui Province, China, and lost both of his parents while in high school. He was then raised by his brother and sister. Wang earned a Bachelor’s Degree in Metallurgical Physical Chemistry and completed his Master’s Degree in Materials Science at the Beijing Nonferrous Metals Research Institute. Before moving into private industry, Wang served as the Institute’s Deputy Director — the youngest Executive at the Institute.

Unlike others who were abandoning Nickel-Cadmium (NiCd) Batteries, Wang realized there was still demand for Nickel-Cadmium batteries from companies that would continue developing products requiring lithium-ion batteries. Therefore, Wang identified an opportunity for himself and others in the battery industry.

The Glove Box Revolution

Instead of constructing costly living spaces for battery production (the norm in the industry) , Wang created a clever solution called “The Glove Box”. The Glove Box is a sealed, pressurized, see-through box in which workers can put their hands through attached gloves to build batteries within the microenvironment of an incredibly high-class living area.

Key Insight: Instead of cleaning the entire factory, BYD created a portable clean room per workstation. This reduced manufacturing costs by 70–80% — making BYD batteries 5–6x cheaper than Japanese competition.

The results were extraordinary

Just the section of the building that produces batteries had to have some type of protection placed over it; no other area required such a measure.
The price to manufacture products with BYD dropped by as much as 70%–80% compared to what its Japanese competitors charged.
To increase manufacturing output, BYD was able to add additional boxes and/or add additional lines with minimal investment rather than building new buildings.
Labor rates were significantly less expensive. For example, in 1995, the minimum wage in China was approximately $24 per month compared to Japan’s at $189 per month.

As of 2002, BYD is now one of the largest manufacturers of nickel-cadmium (NiCd) batteries in the world and has obtained several large multinational accounts, including Nokia and Motorola, as a result. Additionally, BYD became a publicly traded company on the Hong Kong Stock Exchange this same year.

The Pivot to Cars — and a Decade of Ridicule

Batteries were, in Wang’s thoughts, just castles made of sand. Lithium-ion was the future. Wang shocked investors when he went against the grain and made cars. The problem was the poor quality of BYD’s early cars.

Journalists joked that the front of a BYD looked like a Toyota Corolla’s, while a Chevrolet Optra followed it. Videos showed doors not closing properly. Electric buses produced in the United States received negative reviews for their performance and low range. For over a decade, BYD was the laughingstock of the American EV market, sitting back as Tesla led the EV revolution in the United States.

The years 2010–2020 were BYD’s crucible. Wang kept pouring battery profits into R&D and design, refusing to quit. Most entrepreneurs would have pivoted. Wang doubled down.

COVID-19: The Cockroach Entrepreneur

When the pandemic hit in 2020, global automakers hemorrhaged losses. Ford, Tata Motors, Jaguar Land Rover, and Nissan all reported devastating red figures. BYD had 224,000 employees it needed to pay with car sales frozen.

Wang’s response? He converted BYD’s car factories into mask factories. Within two weeks of making the decision on January 31, 2020, BYD became the world’s largest manufacturer of face masks, shipping to hospitals, law enforcement agencies, and governments globally.

The result: BYD made $643 million in profit in the worst year of the global economy. This is what Wang calls the cockroach philosophy — when everyone else runs for cover, find the crack and keep moving.

How BYD Actually Beat Tesla: The Three-Pronged Strategy

1. The Blade Battery Breakthrough

In 2020, BYD unveiled its Blade Battery — using lithium iron phosphate (LFP) chemistry instead of the nickel manganese cobalt (NMC) batteries used by Tesla. The difference was startling.

In the industry’s most brutal safety test — the nail penetration test — engineers drove a steel nail through a fully charged battery to trigger a short circuit. Standard NMC batteries caught fire at over 500°C. The BYD Blade Battery barely reached 30–60°C. No smoke. No fire.

🔋 In 2024, BYD’s battery unit FinDreams secured a supply deal with Tesla — not for Tesla’s electric cars, but for Tesla’s Shanghai energy storage Megafactory (Megapack product line). FinDreams captured over 20% of that factory’s cell orders, with Tesla’s motivation being cost reduction and supply chain diversification rather than any declaration of superiority. Still, the fact that a direct competitor is now buying your batteries speaks volumes.

2. Unbeatable Price Points Through Vertical Integration

BYD controls its entire supply chain — from raw material mining to manufacturing, battery production, design, and recycling. This vertical integration delivers cost advantages that Western competitors cannot match:

Model	BYD Price	Tesla Price
BYD Seal vs. Tesla Model 3 (China)	$15,270	$36,279
Entry-Level Model (China)	$7,800	$36,270

3. The PHEV Masterstroke — Targeting 758 Million People

Tesla builds only fully electric vehicles (BEVs). BYD also builds plug-in hybrids (PHEVs) — cars that switch to a petrol engine when the battery runs out. This single decision unlocked a market Tesla could never reach.

China’s population is broadly segmented by income:

• China 1: 23 million people earning $18,000+/year — Tesla’s primary market

• China 2: 242 million people earning $7,300–$18,000/year — reached by both Tesla’s Model 3 and BYD

• China 3: 493 million people earning $3,650–$7,300/year — reachable only by BYD’s affordable PHEVs

In tier 2 and tier 3 Chinese cities with limited charging infrastructure, a PHEV was not just more affordable — it was the only practical option. Tesla could realistically target 265 million consumers. BYD could target 758 million.

📊 Among the top 6 best-selling EVs and PHEVs in China, 5 are BYD models. And the top 2 PHEVs combined outsell the top 3 pure EVs combined.

3 Business Lessons from BYD’s Rise

Lesson 1:

Build a Cash Cow Before Chasing Glory

Wang didn’t start by building cars. He started by building batteries — an unglamorous, overlooked business that generated the cash flow needed to fund his real dream. Every rupee, dollar, or yuan BYD earned from batteries was reinvested into the automotive R&D that eventually beat Tesla.

Before you chase your dream, build the machine that funds it.

Lesson 2:

Innovation Is Often Simplification

BYD’s glove box didn’t win because it was high-tech. It won because it was the simplest, cheapest solution that actually worked. The most powerful innovations in business history are often the ones that cut complexity, not add to it.

Ask not: ‘How do I make this more sophisticated?’ Ask: ‘How do I make this simpler?’

Lesson 3:

Build your future with the pieces others tried to break you with.

For a decade, the world threw bricks at BYD — through mockery, bad press, failed products, and public ridicule. Wang picked up every brick and used it to build. The design critics? He hired world-class designers. The safety concerns? He invented the Blade Battery. The price gap? He mastered vertical integration.

Every criticism BYD received became a blueprint for what to fix next. That is the true secret of BYD’s rise — not genius, but relentless, systematic response to failure.

Final Thoughts

The story of BYD is proof that the most dangerous competitor in any market is not the one with the most money, the best PR, or the most charismatic founder. It’s the quiet one who is learning, iterating, and building — brick by brick — while everyone else is too busy laughing.

Wang Chuanfu didn’t set out to defeat Elon Musk. He set out to Build Your Dreams. And somewhere along the way, the world’s greatest EV company was born.

How BYD Dethroned Tesla as the World’s #1 Electric Vehicle Maker