China’s leading EV manufacturer, BYD, is catching up with Tesla in sales, according to sales figures published by Reuters. The company posted a 21 percent increase in electric vehicle sales throughout the second quarter. This totals 426,039 EVs from April to June, which is just 12,000 fewer vehicles than Tesla’s estimated deliveries for the same time period. This places BYD in a good position to become the world’s leading vendor.

Tesla just reported a five percent drop in deliveries for the most recent quarter, which is the first time the company has ever experienced two straight quarters of decline. It produced 410,831 units and delivered 443,956 EVs in Q2. Production decreased by over 20,000 units compared to quarter one. Analysts like Barclays predicted an even steeper drop, so this is (sort of) good news for the company. 

There are a lot of factors playing into Tesla’s decline, but the biggest one is likely the fact that it seems to have abandoned budget-friendly models in favor of robotaxis and dystopian stainless steel beasts. BYD’s cars are fantastically cheap, with the recently-released Seagull starting at just $10,000. Of course, the company doesn’t have much of a presence in the US yet and tariffs on imported Chinese vehicles hope to keep it that way. The EU has taken a similar approach to curb the influx of inexpensive Chinese EVs.

BYD is part of China’s industrial strategy to topple US carmakers, though there’s one sure-fire way to stem the tide. Automakers should manufacture cheaper electric vehicles. BYD is becoming a global phenomenon because it makes budget-friendly EVs that aren’t pieces of junk. Some manufacturers have taken note. Look at the Nissan Leaf, for instance, or the Hyundai Kona. One company that seems to have ignored the memo entirely? Tesla.

This article originally appeared on Engadget at https://www.engadget.com/chinas-byd-is-catching-up-with-tesla-in-sales-153900131.html?src=rss