The Shenzhen-based company sold more EVs in Europe than Tesla for the first time in April, and has seen sales surge across the continent even as Tesla’s have collapsed.
Now, the two companies have a new battleground: India.
Despite the world’s third-largest car market proving largely inhospitable to Western and Chinese brands, both BYD and Tesla are pushing hard to crack it.
Becoming a success in a country where cars are massively outnumbered by motorcycles is far from simple, but the rewards could be huge.
Brajesh Chhibber, a partner at McKinsey and the co-lead of the consultancy’s center for future mobility in India, told Business Insider that India’s EV market is set to grow rapidly over the next few years.
He estimated that electric car sales in the country could rise to between two and three million a year by 2030, up from 100,000 in 2024 and nearly twice the size of the US market last year.
Tesla’s arrival in India has been a long time coming.
The EV maker opened preorders nearly a decade ago, but only started selling its cars in India in July, a delay that left some customers waiting years to get their vehicles.
Tesla has opened two showrooms in Delhi and Mumbai so far, selling its Model Y SUV at an import tax-inflated price tag of around 6 million rupees ($70,000), almost twice the price of the entry-level Model Y in the US.
The Elon Musk-owned automaker has also ramped up hiring. In addition to customer service and support roles, Tesla is recruiting Autopilot testers in Mumbai and Delhi, suggesting the company eventually plans to bring its assisted driving tech to the country.
Puneet Gupta, India Automotive Market Director for S&P Global, told Business Insider that Tesla had entered the Indian market “half-heartedly,” citing a lack of salespeople and showrooms.
“Tesla is an inspirational brand for many Indian consumers. But if a brand like Tesla is coming in with two outlets, it shows that you are not interested too much in the business,” Gupta said.
Tesla is selling the Model Y in India for around 6 million rupees ($70,000).PUNIT PARANJPE/AFP via Getty Images
India imposes a steep 70% import tax on foreign vehicles in an effort to get automakers to build factories in the country.
Plans for Tesla to set up a production plant have stalled repeatedly over the years, and in June, an Indian government minister said that the company was “not interested” in building cars in India.
Tesla’s launch has had a tepid reception from India’s automotive enthusiasts, Vilas Deshpande, cofounder and COO of Indian EV startup Vayve, told Business Insider.
“It would have been exciting to see them in the market six years ago. Now, I would say the response is probably ‘meh,’ not excitement,” he said.
Deshpande said the high price point of the Indian Model Y pushed it into the premium market, automatically reducing the demand, and added that the lack of a supercharger network in India made Tesla’s EVs a tough sell.
Tesla also faces stiff local competition in the form of local brands like Tata Motors and Mahindra, which dominate India’s nascent EV market and don’t have to worry about hefty import taxes.
“There’s definitely pretty good local competition for Tesla. The Indian carmakers have the advantage of making in India, which is a huge cost advantage,” Deshpande added.
Gupta said that Tesla would likely see increased demand should the company enter India “wholeheartedly,” with manufacturing and a major retail presence.
“India is the third largest car market in the world, and you clearly can’t ignore this market,” he added.
BYD faces even steeper barriers to entry than Tesla. Frosty geopolitical relations between India and China have stymied the company’s attempts to build a factory or partner with local manufacturers.
Until recently, some members of BYD India’s senior leadership were unable to get a visa to enter the country, according to a Bloomberg report.
Despite this, the Tesla challenger has seen some success, launching its Atto 3 and Sealion 7 EVs in the country and selling its 10,000th vehicle in India in September.
BYD has bet heavily on overseas markets to drive growth, with sales in China flatlining in recent months amid a brutal price war.
Gupta said India had “tremendous potential” for BYD because of the Chinese brand’s lineup of affordable vehicles, describing them as ideally suited to the Indian market.
“When it comes to BYD, people are still buying them, in spite of a massive import duty,” he said.
“If the duty is reduced, then they can really rock the market because when it comes to Chinese players, they give you value, they give you features, they give you technology,” Gupta added.
BYD has launched several vehicles in India, including the Atto 3 EV.John Keeble/Getty Images
There are signs that the diplomatic walls that have hampered BYD’s ambitions in India are beginning to come down.
After Indian Prime Minister Narendra Modi met with China’s leader Xi Jinping at a summit in Beijing in August, Bloomberg reported that easing travel restrictions between the two countries would allow BYD India’s senior leadership to visit the country for the first time.
Both BYD and Tesla will have to overcome India’s history of becoming a graveyard for global carmakers. General Motors and Ford exited India in 2017 and 2021, respectively, after years of struggling sales.
Chhibber said that any global carmaker attempting to set up in India must be aware of the market’s unique nature.
He warned that simply trying to replicate product lines and strategies that have worked elsewhere was a “recipe for disaster,” adding that brands needed to be prepared to “play the game wholeheartedly” to win over customers.
“The market has seen many of these large players folding up and going away, and that puts a question mark on whether these global companies will stay here. So you have to demonstrate commitment,” he added.
