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BYD Set to Surpass 2024 Sales Goals, Overtake Ford and Honda

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China’s leading electric vehicle (EV) maker, BYD, is poised to exceed its 2024 global sales target of 4 million vehicles, positioning it to surpass Ford and Honda in the process. The company’s growth has been bolstered by its significant market share gains in China, as well as strong sales driven by its competitive lineup of plug-in hybrid models. In the first 11 months of 2024, BYD delivered 3.76 million vehicles, including 506,804 units in November alone. This robust performance comes as China’s car sales grew at their fastest pace in 2024, supported by government-subsidized auto trade-ins.

Expansion and Market Share Gains

BYD’s impressive growth trajectory is largely fueled by an expansion in production capacity and an aggressive hiring strategy. The company added nearly 200,000 units in production capacity between August and October and hired 200,000 new employees. Its workforce now totals nearly 1 million, a sharp increase from 703,500 at the end of 2023. BYD’s market share in China stood at 17.1% as of November, a significant jump from 12.5% in 2023, according to the China Passenger Car Association.

Competitive Edge in the Price War

The company’s success is also attributed to its ability to thrive in a price war that has challenged foreign automakers. BYD has managed to maintain competitive pricing by requesting price cuts from suppliers and benefiting from its extensive scale. This strategic move has helped BYD reduce costs, outperform its rivals, and capitalize on the growing demand for electric vehicles in China.

Outpacing Rivals

BYD’s rapid growth in 2024 has allowed it to outpace traditional automakers like Ford and Honda. If current sales momentum continues, the company is on track to sell over 6 million units in the next 12 months, putting it in the same league as industry giants such as General Motors and Stellantis. The Chinese EV maker is targeting sales of 5 to 6 million vehicles in 2025, according to Citi analysts.

Lithium Supply Glut to Persist, Benefiting Battery Makers

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Despite a significant drop in lithium prices, many mines, particularly those operated by Chinese companies, continue to produce the raw material essential for electric vehicle (EV) batteries. This ongoing production, despite weak prices, is leading to a prolonged oversupply of lithium, which is expected to keep prices low for years. Battery makers, some of which own or invest in lithium operations, are benefiting from this surplus.

Continued Production Amid Price Weakness

The lithium market has experienced significant volatility, with prices for lithium hydroxide plunging nearly 90% since December 2022. However, many producers are maintaining operations despite price declines. Some of these mines are operating at a loss, but producers are reluctant to halt production due to concerns over losing market share and the complexities of restarting mines.

The global lithium supply is projected to increase by 25% this year and another 15% in 2025, contributing to the glut. Analysts estimate that around 10% of lithium production is currently unprofitable. However, mines in regions such as China, Australia, and Zimbabwe remain open, with some producers absorbing losses due to their integration into global supply chains or strategic interests.

China’s Strategic Investment and Zimbabwe’s Role

China has significantly invested in lithium projects globally, including in Zimbabwe, which has quickly risen to become the world’s fourth-largest supplier. Despite high production costs, Chinese-owned mines in Zimbabwe continue operations, often at a loss, due to the strategic importance of securing lithium supplies. Chinese companies also absorb some of these costs through downstream activities, including battery production, which helps maintain a steady flow of raw materials for the EV and battery sectors.

Australian Mines and Battery Maker Support

In Australia, where lithium extraction costs are also high, some companies have maintained production with support from battery manufacturers. Australian miner Mineral Resources, for instance, has kept its higher-cost mines running, partially offsetting losses with other profitable mineral production. Similarly, Liontown Resources has kept its Kathleen Valley mine operational, bolstered by a $250 million investment from South Korean battery maker LG Energy Solution.

China Launches Antitrust Probe Into Nvidia Amid US-China Chip Tensions

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China announced on Monday it has launched an antitrust investigation into Nvidia, targeting alleged violations of the country’s anti-monopoly law. This move is seen as a countermeasure to recent U.S. restrictions on China’s semiconductor industry, escalating tensions in the ongoing tech rivalry between the two nations.

The State Administration for Market Regulation (SAMR) stated that Nvidia, known for its AI and gaming chips, is under scrutiny for potentially breaching conditions set during its 2020 acquisition of Israeli chipmaker Mellanox Technologies. While details remain scarce, the regulator mentioned suspicions about Nvidia violating commitments to supply products on “fair, reasonable, and non-discriminatory” terms, among other stipulations.

Retaliatory Backdrop

This probe follows heightened tensions between Washington and Beijing. Last week, the U.S. introduced new restrictions on 140 Chinese companies, further curbing China’s access to advanced semiconductor technology. In response, Beijing banned exports of critical minerals like gallium, germanium, and antimony to the U.S.

In addition, four major Chinese industry associations called on domestic firms to reduce reliance on U.S. chips, labeling them “unsafe” and encouraging purchases from local suppliers. Nvidia, which once commanded over 90% of China’s AI chip market, has faced diminishing revenue from China, dropping from 26% of its global total two years ago to 17% by January 2023.

Nvidia’s shares fell by 2.5% on Monday following the announcement. The company stated it would cooperate with regulators and reaffirmed its commitment to honoring agreements in all regions. However, analysts like Bob O’Donnell from TECHnalysis Research believe the investigation’s immediate impact on Nvidia will be limited, as U.S. restrictions already prevent the sale of its most advanced chips to China.

Nvidia’s Strategic Adjustments

U.S. sanctions in 2022 prohibited Nvidia from selling its A100 and H100 AI chips to China, prompting the company to create modified versions for the Chinese market. Further tightened U.S. export controls in 2023 led Nvidia to develop new variants tailored to Chinese restrictions. Despite these challenges, Nvidia faces mounting competition from domestic players like Huawei.

China’s Antitrust Track Record

China’s antitrust probes into foreign tech companies are not new. The most prominent case occurred in 2013, when China fined Qualcomm $975 million for market abuse in wireless communication standards. Similar to that case, Nvidia is accused of practices such as discriminatory terms, product bundling, and unfair supply conditions—issues tied to the Mellanox acquisition conditions.

The investigation could signal Beijing’s intent to leverage regulatory tools to counter U.S. sanctions while fostering its domestic chip industry.