Monday, June 12, 2023

Deep Dive: Tesla vs Archrival BYD

This is the second time in six weeks that Investor's Business Daily has looked at the two, this time with more emphasis on the businesses underlying the stocks.

From IBD, June 11:

Tesla (TSLA) and BYD (BYDDF) are the world's largest electric-vehicle makers, becoming more direct competitors in China and much of the world.

A lot of attention is focused on EV startups such as Nio (NIO), Li Auto (LI), Xpeng (XPEV), Rivian (RIVN) and Lucid (LCID). Efforts by traditional auto giants such as General Motors (GM), Ford Motor (F) and Volkswagen (VWAGY) also get coverage. However, Tesla and BYD stand apart.

At one point, the idea of China's BYD competing with Tesla would have seemed laughable, and indeed Elon Musk did laugh at the idea back in 2011. But when that video clip circulated again on Twitter recently, Musk tweeted back. "That was many years ago. Their cars are highly competitive these days."

Musk on May 30 traveled to Beijing. He's meeting with top China officials and will likely tour the Tesla Shanghai plant during his visit

In 2022, China EV and battery giant BYD's vehicle sales raced ahead of Tesla's. For all-battery electric vehicles (BEVs), Tesla remains No. 1.

In 2023, Tesla has slashed prices multiple times, as demand struggled to keep up with booming production capacity. Chinese EV makers have made their own cuts, including BYD.

Tesla earnings fell solidly in the first quarter, with gross margins plunging. BYD reported booming Q1 earnings growth vs. a year earlier, though profit and sales fell vs Q4.

Tesla has just four models, with the bulk of its sales the Model Y crossover SUV. The EV giant is expected to begin Cybertruck later this year and perhaps unveil a revamped Model 3. But there are still few details about prices, specs or when mass production might begin. Musk has teased a next-generation model, but little more than that.

BYD has an ever-growing lineup, with EVs from $11,000 to $160,000. New and refreshed models are commonplace.

Meanwhile, BYD has started supplying batteries to Tesla, making these two archrivals frenemies too.

Tesla stock boomed in early 2023 after a terrible 2022.  After consolidating for several months, TSLA has broken out into a buy zone.

BYD has done well in 2023, and also is in a buy zone.

Let's take a look at BYD vs. Tesla, as well as BYDDF stock vs. TSLA stock.

Tesla Vs. BYD Sales In 2023
Tesla deliveries in the first quarter hit a record 422,875, up 36% vs. a year earlier. But they only rose 4% vs. the fourth quarter, despite big Tesla price cuts and U.S. EV tax credits. Deliveries included 412,180 Model 3 and Y vehicles, along with 10,695 Model S and X luxury vehicles.

Output reached 440,808, topping sales yet again. Model S and X production was 19,437.

The Model Y was the best-selling vehicle in Q1, the first time an EV has done so.

Model Y sales in the U.S. are doing fine Q2, buoyed by price cuts. Tesla sales in Europe and China also were good in April, but that might reflect now-ample supply to start the quarter, vs. truly robust demand.

BYD sold a record 240,220 vehicles in May, up 109% vs. a year earlier and 14.2% vs. April. Among personal vehicles, BEV sales hit 119,603, slightly exceeding plug-in hybrids at 119,489.

While Tesla leads BYD in BEV sales globally, the latter is No. 1 in China. In fact, BYD is now China's largest automaker, period.

The Tesla-led EV price war took a toll on BYD, especially vehicles such as the Han and Seal. But sales are beginning to pick up, with refreshed models that often come with lower prices.

Tesla Price Cuts
Tesla slashed prices worldwide in January, with further cuts in most markets since then, including in April.

The price cuts have made Model 3 and Y vehicles eligible for U.S. tax credits of $7,500.

China EV makers have slashed prices in response to Tesla and a general production cut. BYD resisted at first but has become more aggressive in the past several weeks. BYD and rivals are rolling out a slew of new models, many of which will take on Tesla vehicles.

Tesla raised official U.S. prices slightly twice in May. It's also slightly raised prices in some other key markets, including China. Some Model S and X price hikes have come with Supercharging or cheaper financing. Tesla may be trying to get possible buyers to act vs. waiting for further price cuts.

U.S. Model Y demand has been strong, though recent price upticks appear to have cooled order demand....


Previously (May 1):
Electric Vehicles—Battle Of The Biggest Producers: Tesla Stock Vs. BYD Stock