"The biggest car brand you've never heard of."

Now, China's BYD has overtaken Tesla as the world's largest seller of electric vehicles.

Even if you've never heard of BYD, there's a chance you've been in one of its buses.

While these taxis prow the streets of some of the world's biggest cities.

But buses and taxis aren't the reason why BYD has overtaken Tesla.

Instead, it's a fruit of long-term strategic thinking on the part of Byd itself and the Chinese government.

And it is setting China up to be the dominant global player in the transportation of the future.

Electric vehicles, a business that could be worth $8.8 trillion by the end of a decade.

Here are the three most important things that have made BYD, the king of EVs.

The Chinese government has played a huge role in BYD's rise.

We've arguably never seen anything like this in terms of, you know, the amount of support that China has extended to automakers, specifically pertaining to EVs.

Beijing has given an estimated $30 billion of tax exemptions to the industry since 2010 and may waive a further 97 billion by 2027.

China actually takes a carrot and stick approach.

They set mandatory EV output targets for automakers, but they also offer cheaper loans and cheaper land and R&D subsidies to all those EV makers.

And BYD has been a massive beneficiary of that.

It still sells most of its electric vehicles in its home market.

But of course, Tesla has also benefited from Chinese subsidies, which is where the second reason for BYD's rise comes in.

Most of BYD's cars are simply a lot cheaper than Tesla's.

In fact, it sells 10 popular models starting from less than Tesla's cheapest offering for the Model 3 sedan and BYD sells a lot more of the cheaper vehicles in its lineup.

They have very cheap models starting from $10,000.

Their approach has been extremely different in the sense that Elon Musk believed that you had to sort of start from the high end with a sexy performance car to get people interested in electric cars and then work your way down the price spectrum.

BYD went at it from the other end where it was about cheap taxis and buses that needed a heck of a lot of batteries and really sort of, you know, drove down the prices of the batteries that they could put into passenger cars.

While the average price paid for Tesla is about 45,000, the average Byd sells to roughly half that.

That, of course, raises a question. How can it sell them so cheaply?

The secret to that price tag lies in what is known as vertical integration.

Our vertical integration capability gives us flexibility in faster response to market trends as well as better support for brand development and customer service.

That's a fancy way of saying that they make a lot of the things that go into their vehicles themselves.

Carmakers usually buy most components from suppliers such as Bosch, Continental, and Aptiv.

Volkswagen, for instance, only makes 35% of the parts in its ID.3 electric car; Tesla, meanwhile, makes 68% of the parts that go into its Model 3 made in the US.

BYD makes 75% of the parts that go into the seal.

It's flagship model.

The most important factor is that Byd is the only auto maker that produces all of its batteries in house.

That was hugely important during the pandemic when the supply chains were just absolutely in a state of chaos for the industry.

The fact that BYD was in control of its own destiny gave them a huge leg up over the rest of the industry and especially as it pertains to batteries.

This is a company that has been in the battery space since the 1990s.

BYD actually stands for "build your dreams." It started out in 1995 as a battery company.

They make rechargeable batteries for mobile phones and other electronics products.

And then the company got into the auto business in 2003.

Making its own batteries and other components helps it reduce a lot of costs.

That's attracted some big name investors.

Call it the continued BYD promotional roadshow and investor, Warren Buffett brought his buddy Bill Gates along for the ride here in Beijing.

It was fantastic.

I'm amazed at the quality of that vehicle.

Warren Buffett was one of the biggest early investors in BYD through his holding company, Berkshire Hathaway.

And the battery technology might also give BYD a technological edge over some rivals.

It uses lithium-iron-phosphate, which is not only cheaper than other batteries, it's also packaged a lot more compactly.

And chemistry is a core expertise of founder Wang Chong Fu.

He is sort of the anti Elon Musk.

Wang is a chemist by training and an engineer and an anecdote that one of our reporters was told was that when he was told he needed to dress up a bit for an investor meeting, he stopped to buy shirts just sort of off the street.

And so he's far from one of the flashier executives in the auto industry.

[Speaking in Chinese] BYD has an early start in battery technology and vehicle integration testing. WE've been in a leading position and built up a lot of technological expertise.

This is all set BYD up to be the biggest player in electric vehicles.

The question now is whether it can become one of the world's biggest car maker, full stop and that means growing outside of China.

In 2021, BYD started to step up its global expansion.

It started to launch more passenger vehicles across the global market, including Middle East, Southeast Asia and Europe.

It's still a very new entrant in global markets.

The volume contribution is rising but still small.

Even so, BYD, inside three years has become one of the top selling ev brands in markets such as Thailand, Brazil and Australia.

It's also remains to be seen whether this company can quickly grow in some of these newer markets that it's entering where it isn't well-known, it isn't recognized.

The two most prominent challenges in BYD's global expansion will be first, regulatory uncertainties and second, brand awareness.

The European Union is investigating into Chinese EV subsidies.

Chinese automakers, they are exporting more of their EVs into Europe because those cars are produced in China.

So the production costs are pretty low, which allows the automakers to set their prices in the Europe cheaper than the European counterparts, which has been very alarming to the European auto industry.

One way around that will be to increase the amount of local production.

Definitely localization is one of the very important strategy of BYD's Europe strategy.

And so we are considering where evaluation different location in Europe, and where we can build the cars.

And apart from buses and trucks, BYD isn't in the US.

The trade tensions between Beijing and Washington are keeping BYD back and giving them pause to entering the US market,

For years, automotive experts have predicted established car making giants like GM, Volkswagen or Toyota would catch up with Tesla in electric vehicles.

In hindsight, it probably shouldn't be a surprise that a Chinese rival got there first.