BYD, the Chinese electric vehicle (EV) manufacturer backed by Warren Buffett, has announced a remarkable surge in profits, surpassing Tesla as the world's leading seller of EVs. Despite operating in a challenging external environment marked by global inflation and a slowdown in major economies, BYD reported a staggering 80% increase in net profit, totaling 30 billion yuan ($4.2 billion) in 2023.

In the last three months of last year, BYD outpaced Tesla by selling 525,409 battery electric vehicles (BEVs), compared to Tesla's 484,507. This achievement solidified BYD's status as the new global EV leader. Throughout 2023, BYD sold a record-breaking 3.02 million vehicles worldwide, marking a remarkable 62% increase from the previous year. Included in this figure were 1.44 million plug-in hybrid vehicles, a segment that Tesla does not currently engage in.

One of the key factors contributing to BYD's success is its affordability relative to Tesla. With its entry-level model priced at just over $10,000 in China, BYD's vehicles have attracted a broader range of buyers. In contrast, Tesla's cheapest offering, the Model 3, starts at almost $39,000. This more accessible price point has played a significant role in BYD's rising popularity.

However, increasing competition and a fierce price war have impacted the profit margins of many Chinese automakers, including BYD. The Chinese car industry's profit margin for the first 11 months of 2023 stood at 5%, down from 5.7% in 2022 and 6.1% in 2021, as per data from the Chinese Passenger Car Association. Despite slim margins, the price war shows no signs of abating. Recently, BYD reduced the starting price of its most affordable EV, the Seagull hatchback, by 5% to 69,800 yuan ($9,670). Other Chinese manufacturers, including Geely, Chery, and XPeng Motors, have announced similar price reductions in recent weeks.

BYD's exceptional rise in profitability and its position as the world's top EV seller in 2023 underscore its growing prowess in the rapidly expanding electric vehicle market. With strategic pricing and robust sales figures, BYD seems well-positioned to capitalize on the increasing global demand for sustainable transportation options.

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