Tesla sold 435,000 electric cars last quarter, while BYD sold 431,000 battery-powered electric cars over the same period, leaving a gap of just over 3,000 between the two firms, according to calculations from Bloomberg.

That small difference means BYD could be close to overtaking its U.S.-based rival when it comes to sales of battery electric vehicles (BEVs), a huge jump for a company that Tesla CEO Elon Musk once derided as a joke over a decade ago. 

BYD is already far ahead when it comes to total sales. Including hybrids, BYD sold over 800,000 cars last quarter, almost twice as much as Tesla, according to Bloomberg.

The Chinese company sold 1.8 million cars last year, over 911,000 of which were BEVs. Tesla, which only sells BEVs, sold 1.3 million cars.

Tesla disappoints

Tesla’s third-quarter sales came in far below analyst expectations. Sales declined by 6.7% from the previous quarter, the first quarterly drop since early 2020.

Musk had previously warned that planned upgrades to manufacturing plants around the world may lead to lower deliveries for the rest of the year. 

Yet the company is also facing sluggish demand, pushing it to launch aggressive price wars in both China and the U.S. On Sunday, Tesla announced a new version of its Model Y for the Chinese market, offering slightly faster acceleration and new ambient lighting at no additional cost from the base model. 

The company still hopes to produce 1.8 million vehicles this year, meaning it would need to sell an additional 450,000 cars in the final quarter to meet that goal.

BYD surges

BYD has surged ahead of its competitors in China by selling more affordable electric vehicles, unlike the premium models sold by Tesla and other EV companies like Nio and XPeng. BYD recently unseated Volkswagen as China’s top-selling car brand. 

The company is now expanding outside China, and is today the top-selling EV brand in markets like Thailand, Israel, and Singapore. It’s even expanding into more developed markets like Japan and Europe.

Chinese EVs are already transforming the country’s auto industry. China overtook Japan as the world’s largest auto exporter earlier this year, according to official Chinese data. And domestic brands are poised to outsell foreign brands in the Chinese market for the first time this year.  

Other car company executives are starting to worry about a possible flood of cheap Chinese EVs. In May, Ford CEO Jim Farley said he saw “the Chinese as the main competitor” when it came to EVs, and called BYD a “very, very impressive company.” 

BYD’s backers, like Warren Buffett’s Berkshire Hathaway, are happy with the company’s booming success. “I have never helped do anything at Berkshire that was as good as BYD,” Charlie Munger, Buffett’s longtime business partner, said in February.

“BYD is so much ahead of Tesla in China,” he added.