The Tesla Model Y is living up to its reputation as the big disruptor. At RM 199,000, Tesla is giving you an electric SUV with sports cars territory performance, for less money than a 3-cylinder BMW 218i. We are talking 347 PS and 420 Nm, sub-7 seconds 0-100 km/h.

But performance is just one part of the appeal. Tesla's software integration is easily 5 years ahead of anyone else. Unlike other EVs, Tesla's Supercharger charging network is integrated into the car's navigation, so you don't even need to keep doing mental arithmetics on your car's remaining range vs distance to next charging station.

While other EV owners are doing their finger tap dance across multiple apps on their smartphone, Tesla owners only need to follow their car's navigation, park, and plug in. Not a single tap on any touchscreen or card reader is necessary.

If there's a queue forming, the navigation will distribute the incoming Tesla crowd to other nearby Superchargers, depending on their car's remaining range and destination.

Also did you know that if you press the horn on a Tesla, the car's built-in dash cam saves the last 10 minutes footage? And we haven't even talk about virtual bodyguard Sentry mode.

While other EV makers' over-the-air (OTA) software improves only the infotainment, Tesla's OTA updates actually improves driving performance, braking, driving assistance functions - your Tesla never gets old. Instead of launching facelift models like legacy automakers, your car Tesla is improved over time.

This is why EV connoisseurs (who I admit, can be annoyingly overzealous) will tell you that Tesla's software integration is like none other. You can even watch Netflix on the car's 15-inch screen while you charge your car.

This is also why the Tesla Model Y is now the world’s best-selling car, irrespective of powertrain. In Q1 2023, the Tesla Model Y (267,200 units) outsold the Toyota Corolla (256,400 units), according to estimates by Jato Dynamics.

Note in the video below, no apps are needed to locate and book a Supercharger.

Over in China, the world's biggest EV market, the Tesla Model Y is No.1 with 203,392 units - cumulative sales from Jan - June 2023. The BYD Atto 3 (Yuan Plus) is in a distant third place, with 141,077 units. It's not even a contest. Chinese buyers overwhelmingly vote for a Tesla over an equivalent BYD.

Tesla's record sales came at the expense many other EV makers, especially Chinese upstarts' balance sheets. At the end of 2022, Tesla hit the automotive sales' equivalent of a nuclear missile launch button – weaponizing its industry-leading 26 percent profit margin to start a price war in China, followed by USA and Europe.

As Tesla cuts prices, its sales soared while competitors lost money on futile discounting to defend their market share. Many Chinese EV brands are now relying on exports to Southeast Asian markets like Malaysia and Thailand, where Tesla have yet to begin deliveries (shipment to Malaysia will only start in 2024), to cover up for their losses in China. 

If you are a smart Malaysian EV buyer, you should mull a bit more on this point.

Closer to home, recon dealers still holding stock of parallel imported Tesla models purchased earlier at a higher price are the collateral damage of Tesla’s price war.

In the weeks leading up to the Tesla Model Y’s launch in Malaysia, many recon dealers have slashed prices of their Tesla inventory by nearly RM 100,000! Some offered even more.

Tesla earns 2x more profit per car than the VW Group (including Audi and Porsche), 3x more than BYD, and 4x more than Toyota (estimates by Reuters). This is thanks to its use of Gigacasting; vertically integrated supply chain; online-only sales channel; upselling software services like Acceleration Boost and FSD. 

Tesla's ridiculously low production cost and ability to keep old models fresh with new software (and thus keeping tooling cost a fraction of other manufacturers') is the nuclear weapon against other EV rivals armed with guns.

Also read: Despite price war, Tesla's profit margin for Q2 2023 rivals Porsche, cheaper Model 3 to go after BYD next

Even after the price cuts, Tesla’s current profit margin stands at 18 percent, on par with Porsche. Tesla has a lot more room to cut prices further.

Now, it is not just recon dealers who are forced to respond. 

Channel checks suggest that demand for the BYD Atto 3 have stalled since June, if the significantly reduced volume of hire purchase application submissions received by banks from BYD dealers is a reliable indication.

And no, Malaysia's car market is not slowing. MAA has just revised its forecast for 2023 upwards from 650,000 to 725,000 units. Honda dealers are working overtime to process bookings collected for their newly launched WR-V while UMW Toyota doesn't have enough Toyota Corolla Cross Hybrid to deliver to customers.

So this slowdown is a BYD / non-Tesla EV models-only problem. We could be seeing the beginning of a price war.

It’s hard to tell if the reduced demand for the BYD Atto 3 is due to Tesla’s disruption, or if the Atto 3 have reached a dead-zone in sales - the point where every EV adopter who wanted a BYD have already bought one, and the Atto 3 is now struggling to convince the rest of the mass market to give its tacky 'Build Your Dreams' badge a second look.

Checks on online marketplaces suggest that BYD is now putting up more discounted, pre-registered cars on sale.

Pre-registered BYD Atto 3 are now being offered with discounts of between RM 10,000 to RM 23,000, depending on the manufacturing year. For reference, the new car price is RM 150,430 for the Standard Range and RM 168,430 for the Extended Range.

Most of these pre-registered cars are around 6 to 8 months old (Atto 3 was launched in December 2022), with 5,000 to 15,000 km on the odometer. These cars are pitched to buyers as discounted ex-demo cars but these are not really ex-demo cars.

Dealers don’t replace their demo cars every 6 months. Dealers of strong brands like Perodua, Honda, and Toyota - brands with genuine, sustainable demand - keep their demo cars for years and will only replace them when a new model is launched.

Browsing through Carlist, about 40 percent of new BYD Atto 3 put up for sale are actually pre-registered ‘ex-demo’ units.

This very high proportion of pre-registered BYD cars suggests that the high sales numbers announced by distributor Sime Darby Beyond Auto earlier this year weren’t all actual sales, but included inflated numbers from pre-registered cars.

Pre-registration is a method to boost sales figures by registering a car under the distributor's or dealer’s name. The vehicle will be used by internal staff for around 6 months before it is sold to a customer at a discounted price, under the excuse that it’s an ex-demo car.

A pre-registered car is still considered as a sale, even though it’s basically Sime Darby Beyond Auto and BYD dealers selling the cars among themselves. Unlike a typical used car, panel banks will usually agree to extend new-car financing rates to a pre-registered car, so it’s still a good deal to customers.

Don’t for one moment think BYD is falling back though. The mainland Chinese are very resilient people and BYD is betting on their cheaper BYD Dolphin – launching later this month – to give BYD a new boost in sales. This will be followed by the higher priced BYD Seal, thus creating a double wave for BYD to ride out of this difficult 2023.

There is a however, one problem. Yes, launching a new model will give BYD a temporary sales surge (usually lasting around 3 months before demand normalizes) but at some point, you will run out of new models to launch and soon BYD Malaysia will be looking at an ageing model line-up, with no fresh models to bring customers into their showroom.

This is why prudent car companies spread out their new model launches, so at any one point in time there is a balanced mix of ageing models that need more effort to push and fresh new models that will sell by itself, no discounts (or pre-registration) needed.

On Wednesday’s Tesla investors’ conference call, CEO Elon Musk indicated that Tesla won’t be stopping its price cuts, and that it makes sense for Tesla to sacrifice some margins to increase volume and ride out this period of weak economy. With a very, very healthy 18.2 percent profit margin as of Q2 2023, Tesla has a lot of room for more price cuts.

Expect more disruptingly low prices for the forthcoming Tesla Model 3, and even more pre-registered BYD cars to hit the market in the coming months.

If the EV experience in China has taught us anything, it will be that Malaysia's EV fan base will soon be split between two camps. It’s the new era Honda v Toyota or BMW v Mercedes fight, and you have to pick a side.

Personally, the choice is easy.

I used to hate EVs, until Tesla Superchargers opened my eyes and I realized that charging an EV doesn’t have to be so stupid - operating multiple apps while driving, just to find chargers, is just dangerous. The way your Tesla's performance and safety keeps getting better overtime is just mindboggling, like magic!

More importantly, unlike BYD's weak A/C, Tesla's air-conditioning actually works well in our hot weather, and Teslas don't drive like a boat.

There's only so much BYD can keep harping about Blade LFP batteries, which by the way, is a similar chemistry used on the base model Tesla Model Y anyway. But just like an Alfa Romeo is not the best car just because it makes the best engine sound, a BYD is not the best EV because of its battery. To be a good electric vehicle, it must first be a good vehicle. 

A Tesla drives like a proper, enthusiast-approved car, and with an amazing software, it's the easier one of the two EV brands to live with. The fact that a Tesla keeps getting better (wear-and-tear battery degradation aside) seals the deal. Once you've tried Tesla's software and its Supercharging network, you can't go back to any other EV.

Also, China's 2023 J.D Power Initial Quality Survey (IQS) puts the Tesla Model Y's quality far ahead of BYD Atto 3 - 150 problems per 100 vehicles versus BYD Atto 3's 171 problems per 100 vehicles. The segment's average score was 164 problems per 100 vehicles. Early criticisms on poor built quality doesn't apply to the Shanghai-made Tesla cars - the source of Malaysia's officially imported Tesla cars.