BYD Moves To World Seventh Largest Country As Tesla Sales Slow

BYD, the world’s largest EV maker, has begun expanding into Brazil, the world’s seventh-largest nation by population at 213 million people. That is just less than two-thirds of what America’s is.

The BYD move is part of its effort to increase sales outside China, its home market. It also seeks to capitalize on Tesla’s (NASDAQ: TSLA | TSLA Price Prediction) weak sales and the fact that CEO Elon Musk no longer considers Tesla primarily an EV company. Tesla sales have fallen sharply in the US and particularly in Europe.

While BYD faces a 100% tariff in the US, the company has begun to gain a foothold in Europe. BYD’s EU registrations rose 268% last year. Tesla’s were down 26%. BYD has two factories in Europe and may add another in Spain. It does not hurt that BYD is employing people in the region. BYD will enter Canada this year. It sells cars in Mexico and may also establish a plant there.

BYD has another immediate reason to push into other countries. Sales in its home market, China, have faltered. According to CNBC, “Chinese electric car giant reported a nearly two-year low in local sales in January, signaling mounting challenges for the world’s largest auto market.” There are many EV companies in China. Fierce competition has fragmented market share and driven prices down.

BYD is chipping away at global expansion, bit by bit. Among the reasons is that it has no chance of coming into the US market soon. The Trump Administration is worried competition, particularly to Ford (NYSE: F) and GM (NYSE: GM), would cripple each financially. Ford CEO Jim Farley said “They have enough capacity in China with the existing factories to serve the entire North American market, putting us all out of business.” This puts hundreds of thousands of US jobs at risk.

Over time, Ford and GM have to face the fact that if American car buyers press hard enough to buy Chinese cars that the government will not be able to keep them out forever. In the meantime, Tesla needs to be concerned as well, as its US sales fall.