BYD’s Pricing Strategy in the EV Market: Comparative Analysis with Tesla and Strategic Recommendations for Sustainable Development

Abstract

In the highly competitive global electric vehicle (EV) market, a sustainable pricing strategy is crucial for commercial success. Through comparing the pricing strategies of BYD, a Chinese volume leader, and Tesla, a premium innovator located in the US, this study examines the differences between BYD’s cost-plus and penetration pricing, enabled by unprecedented vertical integration, and Tesla’s value-based and premium ecosystem approach. By drawing upon public financial and market data, this study finds that while BYD’s low-cost strategy in the recent price wars has secured market share, it has resulted in margin compression and brand dilution. Tesla, on the other hand, invests in building software, an energy ecosystem and a premium brand, but this limits its volume growth. In order to shift from volume-based competition to balanced, profitable growth, we propose in this paper that a sustainable future requires BYD to integrate dynamic, value-based pricing mechanisms, reinforce its highend branding and cultivate software monetisation. These findings offer strategic insights for automakers navigating the competitive EV landscape.