BYD on Tuesday unseated Volkswagen and became the world’s third-biggest automaker by market capitalization. The milestone came at the same time when the Chinese automaker also announced plans to supply batteries to Tesla.

Why it matters: This is an unprecedented high for BYD, reflecting investors’ excitement around the Chinese automaker’s potential to be a dominant force as the auto industry makes the transition to EVs.

Details: BYD’s market capitalization as of Tuesday was $128.8 billion, as shares in the Shenzhen-listed automaker rose 6.4% to hit an intraday high of RMB 320.47 ($48) on Monday, according to market valuation data.

  • BYD took over the third spot from Volkswagen (market cap of $117.5 billion). BYD’s market cap is only a little over half of Toyota, the second place with $228.4 billion. Tesla ranks first with a market cap of $742.5 billion.
  • China’s second-biggest battery maker will also begin supplying batteries to Tesla “very soon,” BYD’s executive vice president Liang Yubo said in an interview with CGTN released on Wednesday, without offering further details.
  • This confirms previous reports that BYD’s lithium-ion phosphate batteries, also known as blade batteries, have already been tested in Tesla’s locally-made vehicles in the Chinese market.

Context: BYD is among the biggest winners in China’s decade-long push into green energy vehicles and has maintained strong momentum despite coronavirus outbreaks and lockdowns. The company made sales of 507,314 vehicles for the first five months of 2022, up 348% compared with a year earlier.

  • The Warren Buffett-backed automaker also had a market share of 11.1% in the global EV battery market from January to March, following CATL and LG Energy Solution at 34.4% and 15.9%, respectively, Bloomberg reported, citing figures from SNE Research.
  • Tesla’s deal with BYD could scale back the US automaker’s reliance on its current suppliers CATL and LG Energy Solution. CATL shares declined as much as 6.9% intraday following the news but closed up 0.22% on Wednesday.
  • Chinese automakers Great Wall Motors and Nio were also high on the list of most valuable vehicle companies, ranking eleventh and thirteenth, with a market cap of $39.3 billion and $32.8 billion, respectively.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen