Until recently, Tesla was the king-in-waiting for the automotive throne. As traditional automakers turned tank-like towards an electric future, the firm looked set to whizz past in a frenzy of bold publicity and Musk-worship. Then 2018 happened and those in the know started to quietly turn their eyes to China.

“I’ve got a max spec Tesla Model X and a solar panel charging at my house,” says Ste Thompson, a 33-year-old British entrepreneur based in LA. “I passed my driving test just before moving here from the UK last year. I wanted a car with the best technology as my first car, kind of skipping non-electric.”

Buying an electric vehicle, or EV, for a first car may sound unusual (especially when it’s a $132,000 Tesla Model X like Thompson’s), but it’s set to become the norm in the next decade once prices start to drop. For Tesla, the Model 3, which starts from £35,000, is being pitched as one of the first mass-market electric vehicles. If only Tesla could make enough of them quickly enough.


Headquartered around the corner from Facebook in Palo Alto, California, Elon Musk’s company has grown rapidly since it was founded in 2003. Today it is widely regarded as the superhero of the EV world, known for selling fast, luxurious, and technical machines. “It auto updates,” Thompson says of his Model X, adding that the patch notes remind him of gaming. “It’s cool to see what new features you get.”

But, for so long seemingly all alone in our EV future, Tesla now faces serious competition. In China, car companies are pumping out EVs at an astonishing rate. In the west, Tesla is still the pinnacle of the industry. In China, it is anything but. “I think China holds the major cards, and electrification of transport will be led by China,” says Professor Patrick Luk, head of the electric power and drives group at Cranfield University. William Ford, the executive chairman of Ford, agrees with Luk, according to a report in The New York Times.

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You may not have heard of BYD (backed by US billionaire investor Warren Buffet), Zhidou, Byton or Kandi, but they’re all trying to take on Tesla and, for many industry watchers, they’re likely to win. BYD, in particular, is one to watch, and it’s already selling more cars than Tesla. This month analysts were more bullish on BYD stock than they were on Tesla stock, according to a report in The South China Morning Post that was based on data compiled by Bloomberg.

According to Luk, China’s EV firms have an edge on Tesla for four key reasons: several of the top EV car makers in China are state-owned with government backing; they have access to the largest domestic market in the world; the Chinese government's strategic policies are very pro all-electric vehicles, and they have better battery capability.


Today, Chinese drivers buy more new cars, and more EVs, than anywhere else in the world. Global annual sales of EVs surpassed one million for the first time in 2017, and China (where EV sales doubled in 2017) accounted for more than half of those. Of the estimated two million EVs that are expected be on the roads by the end of 2018, 40 per cent will be in China, according to the International Energy Agency.

A BYD e6 electric taxi, centre, stands in traffic at an intersection in Taiyuan, Shanxi province, China. Taiyuan was the first city in China to replace its entire fleet of taxis with electric vehicles Qilai Shen/Bloomberg via Getty Images

The Chinese government wants seven million so-called “new energy vehicles” to be sold in the country by 2025. President Xi Xinping has put EV policies in place that should help both manufacturers sell units while also helping tackle China’s putrid air pollution problem. Chinese citizens are offered subsidies of tens of thousands of yuan when they buy EVs. That’s fuelled a surge in the number of purchases in China over the last few years.

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The government has also been making it easier to get a license plate if you have an EV as opposed to a vehicle with an internal combustion engine. Many of China’s so-called tier one cities – such as Beijing and Shanghai – are incredibly congested and polluted so the government is trying to limit the number of new petrol cars going on the road. License plates can only be obtained through a lottery system or expensive auctions. But it’s far from easy to get one in the lotteries – the possibility of getting a license plate in Beijing in June was one in 2,031.


Nan Zhang, a Baidu employee in Beijing, bought a Geely Emgrand EV last year. One of the main reasons she chose an EV car as opposed to a petrol car was to increase her odds of getting a license plate, she says. “The chances of getting a Beijing license plate hit a record low this year,” says Zhang. “Other than that, the overall cost of an EV is lower compared to a petrol car, including charging and maintenance cost.”

Zhang’s EV cost 140,000 yuan (£15,700) but she got a 50,000 yuan (£5,600) subsidy from the Chinese government to help with the expense – that’s around three times cheaper than a Model 3 and five times cheaper than a basic Tesla Model S. One downside to the Geely Emgrand is the battery runs out quicker during Beijing’s cold winters, according to Zhang. But this would also be true of a Tesla.

Yunhan Cai, a video producer in Shanghai, owns a Tesla Model S. She says she bought it because the range is better than most of the Chinese EVs and because it charges quicker. But she admits that she likes the look of the Chinese-made Nio EV.

Tech workers aren’t the only ones buying EVs in China. Tom Hu, a 29-year-old lawyer who works for a company owned by the central government, bought a new BYD e5 last month for 140,000 RMB (£15,600). He was given an 80,000RMB (£9,000) discount by the government. “I believe EV is the trend in future,” says Hu, who lives in Beijing. But while he’s happy with his BYD e5, he still aspires to own a Tesla some day.

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For Luk, Tesla will, in the short term, continue its dominance of the high-end market. That will leave Chinese EV makers to run riot with the bottom and middle.

Parking spots for electric vehicles at a charging station in Taiyuan, Shanxi province, China Qilai Shen/Bloomberg via Getty Images

On a 667 acre site in Shenzhen, BYD is doing just that. The company has created a vast sprawling headquarters includes factories, warehouses, employee dorms, a hotel, a supermarket, and BYD SkyRail (its own monorail system).

Founded in 2003, BYD employs 220,000 people worldwide, which is five times more than Tesla. It sold 114,000 “new energy passenger vehicles” in 2017, which is over 10,000 more than Tesla.

Isbrand Ho, BYD’s European managing director, says the firm has ranked top in China for EV sales for four successive years and globally for three successive years. “Over the past decade, BYD is the only manufacturer in the world that has mastered the three core technology of battery, electric motors, and electric controls,” Ho claims. Beyond this, he explains BYD is also developing electric buses, taxis and an autonomous monorail system for the city of Yinchuan in northwest China.

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When it comes to competition with Tesla, Ho admits both companies differ greatly in their target customers. “BYD cars are more affordable for ordinary consumers, which means we are not in direct competition with each other,” he says.

And where Tesla has struggled, Chinese EV markers will look to capitalise. Earlier this year Elon Musk’s firm said it hoped to build 500,000 cars by the end of 2018, but plans to automate the Model 3 assembly line haven’t materialised leading many to doubt whether Tesla will hit that figure this year.

In a bid to boost production and reduce Chinese import costs, Tesla announced last month that it plans to set up one of its Gigafactory manufacturing plants in Shanghai, claiming it’ll eventually be able to produce 500,000 vehicles a year, primarily for the Chinese market. “The fact that Tesla just announced that it is building a factory in Shanghai means that China is both strategic as the place to make EVs and to place to sell EVs, and Tesla knows it,” says Luk.

If approved, the factory could be up and running by 2020, according to Tesla. Goldman Sachs expects it to cost at least $4 billion but Musk has said Tesla can afford it without having to sell more stock or take on more debt. Analysts believe the plans are impossible without massive new capital investments.

While Tesla awaits permission from Chinese regulators, BYD has just launched the world’s biggest battery factory. The lithium battery plant in the northwestern province of Qinghai will eventually produce 24 gigawatt-hours of batteries a year, enough to power 570,000 BYD EV360s. And as Tesla looks to China, Chinese EV makers are starting to look outside China.

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A Tesla charging station near a shopping mall in Beijing, China Qilai Shen/Bloomberg via Getty Images

Hong Kong’s Byton, founded in 2016 by BMW and Nissan executives, has raised over $700 million (£363 million) from the likes of Chinese web giant Tencent and grown its workforce to 1,100 people to help it take on Tesla.

Incorporated as Future Mobility Corporation, Byton expects cars to start driving themselves soon so it is aiming to differentiate itself from the rest of the pack by focusing more on interior features such as touchscreens and adjustable seats, instead of traditional EV metrics like acceleration and range. One of its prototype cars, the M-Byte, has a 49-inch touchscreen, as well as touchscreens on the steering wheel and the backs of the front seats.

Byton plans to start selling its cars in China initially, in the US by the middle of 2020, and in Europe shortly after. “Elon Musk did an outstanding job in many areas so far and created a lot of acceptance towards EVs in many countries,” says Byton CEO and cofounder Carsten Breitfield. “But our roots and the structure of our company are absolutely different to Tesla.”

China is already the world’s leading manufacturer of cars. And as the world shifts to electric vehicles, there’s a good chance that the nation’s bid to capture the mass market could lead to many of us driving BYDs and Bytons instead of Fords and Fiats. Tesla did not respond to a request for comment.

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Updated 17.08.18, 09:30 BST: The Baidu employee is called Nan Zhang, not Duanling Fu

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