China’s BYD Co is on the brink of surpassing Tesla Inc as the leading global electric vehicle (EV) sales company. The shift, expected in the current quarter, not only marks a significant milestone for the EV market but also underscores China’s increasing influence in the international automotive industry.

Traditionally dominated by well-known names like Toyota Motor Corporation, Volkswagen AG, and General Motors, the automotive sector is witnessing a paradigm shift with Chinese manufacturers such as BYD and SAIC Motor Corporation making substantial strides. Having already surpassed the US, South Korea, and Germany in recent years, China now competes head-to-head with Japan for the top spot in global passenger car exports, with a notable 1.3 million out of 3.6 million vehicles shipped by October being electric.

Bridget McCarthy, head of China operations for the hedge fund Snow Bull Capital, emphasizes this transformative period in the industry, stating, “It’s no longer about the size and legacy of auto companies; it’s about the speed at which they can innovate and iterate.”

The race for electric vehicle dominance also reflects a shift in dynamics between Tesla’s Elon Musk and BYD’s founder, Wang Chuanfu. While Musk expresses concerns about affordability due to high interest rates, Wang has taken an offensive stance, offering a range of lower-cost models compared to Tesla. This strategic move has evidently paid off, prompting Musk to acknowledge that BYD’s vehicles are “highly competitive.”

Warren Buffett, who invested $230 million in BYD in 2008 for an almost 10% stake, has reaped substantial returns. When Berkshire Hathaway began reducing its holding last year, the value of its stake had soared approximately 35-fold to around $8 billion.

BYD’s success can be traced back to its early focus on electric vehicles, aided by government subsidies and support. As one of the few automakers producing its own batteries, BYD benefited from government incentives, allowing it to innovate and scale up production.

Paul Gong, UBS Group AG’s head of China autos research, points out that the level of competition in China, spurred by government support, has been a driving force in the country’s remarkable EV growth. He predicts that Chinese manufacturers may own a third of the global car market by the end of the decade.

Although BYD has yet to surpass Tesla in key metrics such as revenue, income, and market capitalization, analysts expect the gaps to narrow significantly in the coming year. Some projections suggest Tesla generating $114 billion in sales compared to BYD’s $112 billion.

Wang Chuanfu, BYD’s visionary founder, has played a pivotal role in the company’s ascent. Born in an impoverished village in eastern China’s Anhui province, Wang founded BYD in 1995 and has become a billionaire with a net worth of $14.8 billion. His recent global travels and meetings with heads of states signal BYD’s ambitions to expand its presence in the international market.

As BYD prepares to launch its third-generation EVs next year, the company aims to stay ahead by focusing on technological advancements, including automated-driving capabilities. However, staying at the top will require a different mindset, as Yuqian Ding, HSBC Qianhai Securities head of China autos, notes, “When you become the No 1, the mandate suddenly changes. You’re going to redefine yourself – you’re going to have to find a way to beat yourself.”