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BYD May Have Made The Tesla Model 2 Obsolete
Tesla is late to its own party.
The EV revolution that Musk kicked off is well on its way. Practically, every auto manufacturer has an EV in their line-up or, at the very least, one coming very soon. But this eco-minded personal transport revolution has hit a bump. Right now, you can either buy an affordable EV with terrible range and charge times that last aeons, or splash out a vast amount of cash and get an EV that is actually useable. This is leaving the average car buyer high and dry, as they aren’t willing to go electric if it means limiting their freedom. This is stalling the EV movement and stifling growth. As such, a gaping hole in the market has opened for a genuinely useable EV at affordable prices. Tesla’s attempt to fill this hole is the upcoming Model 2, which Musk wants to sell millions of per year. But, the Model 2 may have just been made entirely obsolete by BYD’s latest car, the Dolphin. Let me explain.
If you live in the USA, you might not have heard of BYD. They are the largest EV maker in the world, outselling Tesla by 250,000 cars per year. Moreover, their profit margins are nearly identical to Tesla, hovering just under 20%. This means BYD is making more money than Tesla per year, yet until very recently, they have only sold cars in the Chinese market, whereas Tesla was a worldwide brand. Last year, BYD started to expand globally, and over the next few years, we can expect to see their cars for sale in Australia, the EU, and possibly even the US.
How have they done this? Well, in a similar way to Tesla, they have focused on developing cutting-edge battery technology and making production lines and car designs as efficient as possible. But how BYD has gone about this is very different to Tesla. They focused on developing super energy-dense, fast-charging LFP battery packs rather than lithium-on packs like Tesla. They haven’t developed self-driving technology to save development costs, unlike Tesla. What’s more, rather than focusing on developing new production line technology to drive down costs, like Tesla has, they instead opted to make close ties to raw material suppliers to bring down the cost of production.
This development direction started to pay off for BYD last year when their profit margins soared by 400%. This gave them the financial headroom to start exporting cars to other countries (and still make a profit after import taxes) and gave them the raw cash to start looking at building factories outside their home country of China. Tapping into this wider market could boost their sales to the stratosphere and help them leave Tesla in the dust. But only if their cars are good enough.
This is where their latest car, the BYD Dolphin, comes in. You can already buy this car in Australia and the EU, and it will soon come to the UK and other global markets except for the Americas. This is a shame, as the specs for this car are insane.
The base model costs the equivalent of $25,899 (before subsidies). For that, you get a 45 kWh battery, which can charge at 60 kW or fast charge in as little as 28 minutes (30% to 80%), and gives the car a WLTP range of 211 miles. Now, its battery is very special, as it is BYD’s own blade battery. This LFP pack is one of the densest, safest, cheapest and fastest charging LFP packs on the market, which is why this car is so damn cheap (read more here). But, the blade battery can charge faster than 60 kW, so there may be software-enabled updates down the line to bump up this charge rate.
The top trim Dolphin also uses a BYD Blade battery. It costs the equivalent of $30,000, and for that, the battery is bumped up to 60 kWh, giving 265 miles of WLTP range. The charge rate is increased to 88 kW, but the fast charge time stays about the same at 28 minutes.
This makes the Dolphin an absolute bargain! Its closest competitor (at least in Europe) is the Peugeot e-208. That car costs the equivalent of just under $40,000 new and only has 225 miles WLTP range, charging rates peak at 101 kW, and it takes around 26 minutes to fast charge (though this is measured at 10% to 80%). You can save yourself $10,000, gain 40 miles of range, and get a bigger boot by buying the Dolphin instead.
You might think that its quality and build must be utterly shoddy at this bargain price. But, reviews from Western auto journalists have praised its build quality, practical boot, ride quality, handling and hot-hatch 0–60 times.
All in all, the Dolphin seems like possibly the first affordable, high-quality, yet practical EV. In other words, it seems set to fill the giant hole in the EV market and sell like hotcakes. So, how does it stack up against the Tesla?
Tesla hasn’t yet released the full specs and prices of the 2, but there have been enough press releases and hints from Musk to put together an idea of what it will be like. It is set to be about the same size as the Dolphin, use a 53 kWh pack giving it 250 miles of range, charge rates will be about the same as the Dolphin and the total cost before subsidies is targeted at $25,000. But we are going to have to wait for this EV, as it won’t be ready for sale until 2027 at the earliest. Bearing in mind, here, Musk’s history of over-optimistic timelines.
Initially, the specs were going to be better than this, as Tesla intended to use their revolutionary 4680 battery in the 2. However, delivering a battery with the technology, specs and price promised back in 2020 has proven to be impossible. In fact, some of the 4680s being used by Tesla are actually worse than Tesla’s old 21700 cells! (read more here).
This is why Tesla has stopped using the 4680 in many of its models, such as the Model Y, outside the US. The battery it uses instead? The BYD blade battery. It simply has a far better cost-to-performance ratio.
As such, many industry leaders, analysts and auto industry journalists believe the Model 2 will also use the BYD blade battery. This is why we can be sure its charge speeds will be close to the Dolphins.
Now, on paper, the Model 2 might seem like it will be cheaper ($25,000 vs $30,000 for the top-range Dolphin). But by 2027 (if the Model 2 enters production by then), the Dolphin will have been in production for four years. This means its production lines will likely be scaled and optimised, while its design and the supply chain will be simplified, too, making the car cheaper to produce and, therefore, cheaper to buy. This trend is seen across the entire EV market, and it means that by 2027, don’t be surprised if the top-spec Dolphin’s price is less than $25,000 whilst still making a decent profit margin.
As the Model 2 seems set to use the same bones as the Dolphin and will be a brand-spanking new car, with unoptimised and unscaled production lines, it is highly likely that Tesla simply won’t be able to bring the price of the Model 2 down to match this without sacrificing a significant amount of profit.
Quite simply, the 4680’s hellish development has set Tesla significantly back, and by developing simpler, more established technologies, BYD has gained a significant advantage over them, which we might see play out over the next few years or so. So don’t be surprised if BYD’s sales figures start to eclipse that of Tesla soon.
But it isn’t just BYD. VW, Fisker, Aptera and others will all soon launch EVs at about the same price and specifications as the Dolphin, and these will be available in the US too. So, when the Model 2 finally enters the market, it will already have insanely intense competition. Tesla might simply be too late to the affordable EV market to have the success it wants or is predicted to have.
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