Who’s got it right on EVs: Elon Musk or Warren Buffett?

Over a decade ago, Elon Musk scoffed at the idea that China’s BYD Co. was a legitimate competitor. Oh, how the mighty have fallen.

Now, Warren Buffett-backed BYD is set to wash out its closest rival in China, Tesla Inc. Last week, a BYD executive said that his company was “preparing to supply batteries to Tesla very soon.” The potential deal will catapult BYD to become one of the world’s most prominent and largest EV and battery manufacturers.

It’s a smart move. BYD has upped its game over the past two years with a range of EVs and higher-technology lithium iron phosphate batteries, allowing it to grab global market share. The company plans to sell 1.5 million units this year, pushing it to almost a third of the China EV market by the end of 2022. In April, BYD ranked among the top electric vehicle makers by sales and became the third-largest carmaker by market value in the world. The same month, it sold over 46,000 EVs — compared to Tesla’s 1,728 — and announced it had stopped making fuel combusting vehicles, a first by any manufacturer. In May, even with Shanghai locked down, its EV sales rose 250 percent from a year earlier.

BYD’s arrangement with Tesla hasn’t been outlined clearly yet, but the Chinese company is likely to supply Teslas with its Blade battery — an innovative take on the decades-old lithium-iron-phosphate formulation. It has focused on this chemistry, instead of the nickel-cobalt-manganese variety used by several peers, because it is more efficient in terms of space, energy density and range. It’s safer, too, with a newly introduced cell-to-body structure. Meanwhile, the EV and battery maker has largely been able to circumvent supply chain issues because of its tight relationship with suppliers, and has consistently rolled out a line of cars. As part of its vertically integrated business model, BYD has been actively looking to secure resources like lithium.