Author: ED CARSON
Source
Tesla (TSLA) and BYD (BYDDF) are the world’s largest electric-vehicle makers. Which one is No. 1 depends on your EV definition.
X
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 automakers such as General Motors (GM) and Ford Motor (F) also get coverage. However, Tesla and BYD stand apart.
In 2022, BYD vehicle sales raced far past Tesla’s. Among all-battery electric vehicles, or BEVs, Tesla still leads, though BYD is rapidly closing the gap. Tesla boasts higher pricing, but that pricing is coming under pressure heading into 2023. BYD is moving up the scale, including with premium brands.
Tesla announced big price cuts in China and key Asian markets on Jan. 6, followed by sweeping discounts in the U.S. and Europe. The U.S. price cuts make more Tesla EVs eligible for U.S. tax credits.
Tesla earnings topped Q4 views on Jan. 25, with Elon Musk bullish on production and demand for 2023.
BYD has begun deliveries in Malaysia and India, joining several new and upcoming markets in Asia and Europe as part of a massive international expansion. Its growth trajectory is now much higher than Tesla’s for now.
Despite their similarities and size, Tesla and BYD historically haven’t competed much directly. That’s starting to change, with more BYD models vying for the same segments as Tesla.
Tesla stock had a terrible 2022, plunging sharply in December and to start 2023. But shares have skyrocketed 75% from their bear market lows on Jan. 6, when the latest China price cuts were announced. BYD stock also didn’t have a good 2022 but is soaring in the new year.
Let’s take a look at BYD vs. Tesla, as well as BYDDF stock vs. TSLA stock.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Tesla Vs. BYD: Does BYD Sell More EVs Than Tesla?
Tesla unit sales came in at 1,313,851 for 2022, up 40% vs. 2021 but below the 50% target. The Model 3 sedan and Model Y crossover accounted for the vast majority of sales. The high-end Model S and X vehicles accounted for the rest.
Fourth-quarter Tesla deliveries came in at 405,278, up 31% vs. a year earlier and 18% above Tesla’s old record of 343,830 in the third quarter. Tesla cut prices and offered big year-end discounts in its major markets to boost sales. But that still well short of lowered estimates around 420,000.
Q4 production swelled to 439,701, exceeding deliveries by more than 34,000. That’s even with Tesla Shanghai curbing production on Dec. 12 and suspending output on Dec. 24 through Jan. 1.
Perhaps the biggest concern is that Tesla’s new orders appear to be well below the current delivery pace. Tesla may need price cuts or other incentives that greatly exceed late 2022 offers just to maintain deliveries, let alone increase.
BYD sales surged 209% to 1,863,494 in 2022. Of the personal vehicles — excluding big rigs, buses and heavy equipment — some 911,140 were BEV vehicles and 946,239 plug-in hybrid (PHEV) vehicles. BYD’s hybrids offer at least 50 miles of battery range.
Q4 sales came in at 683,440, up 157% vs. a year earlier and 27% higher than Q3. Of the personal vehicles, 329,011 were BEV.
December sales for BYD hit a record 235,197, but were up just 2.1% vs. November. BEV sales were 111,939, up 132% from a year earlier but down slightly from November’s 113,915. PHEV sales spiked 176% to 122,659.
On Dec. 22, a top BYD executive stated that Covid infections among workers were reducing production by 2,000-3,000 vehicles per day.
Tesla Price Cuts
New U.S. tax credits of up to $7,500 began on Jan. 1., subject to a variety of conditions including income and price caps. The Model 3 is eligible up to $55,000. The five-seat Model Y faces a $55,000 price cap for tax credits, though the less-popular seven-seat Y has an $80,000 cap. The price caps also include the cost of any options, such as higher-end wheels or even Full Self-Driving software.
On Jan. 13, Tesla slashed U.S. prices. The base Model Range Standard Range RWD was cut $3,000 to $43,990. It’ll be $36,240 after the IRA tax credits, at least until the IRS finalizes battery sourcing rules in March. The Performance Model 3 was cut $9,000 to $53,990 and the base Model Y has been slashed $13,000, or nearly 20%, to $52,990, both getting under the $55,000 limit, at least without options. The Performance Y variant has been cut to $56,990, also down $13,000.
Meanwhile, Tesla cut Model 3 and Y prices in Europea.
The price cuts should boost sales, especially in the U.S., but cut further into Tesla’s prized margins.
In Europe, Norway and Germany slashed EV subsidies on Jan. 1, while some other countries have ended them entirely, though Germany later made some tweaks that aid Tesla.
Meanwhile, on Jan. 6 Tesla slashed prices in China, as well as key Asian markets Japan, South Korea and Australia.
In China, Tesla cut the entry Model 3 price to 229,900 yuan ($33,454), down 13.5% from the 265,900 yuan set in late October. The new base Model Y price is 259,900 year ($37,819), down 10% from 288,900 from late October. Both are down about 18% from before late October.
The Tesla Model 3 is now much closer to the BYD Seal, which starts at 225,800 yuan ($32,857). When the Seal first launched, the Model 3’s China price was roughly $10,000 more.
The global price cuts clearly sparked demand for Tesla Model 3 and Y vehicles. Elon Musk said on the Q4 earnings call that orders were running double current production, a huge shift from late 2022, when new orders badly lagged deliveries and output.
The question is how sustainable the demand boost will be. That’s especially true in China, where rivals — not BYD — are already slashing prices and a slew of new models and increased production will target Tesla later this year.
Tesla Cybertruck, Other Models
Meanwhile, the Cybertruck is slated to arrive in summer 2023, which would be Tesla’s first new model since the Model Y launched in early 2020. The oft-delayed truck with its love-it-or-hate-it design may not begin “volume” production until 2024.
A big question is what the Cybertruck’s prices and specs will be.
The Cybertruck, when it arrives, is likely to be largely a North American vehicle. So Tesla may not have a new vehicle for most of its markets until 2024 at the earliest.
Tesla handed over at least two Semi trucks to Pepsi in December, but didn’t declare them as deliveries in Q4. It’s unclear how many Semi trucks will be produced in 2023, with key prices and specs unclear.
Tesla said it will offer details of a new vehicle platform at a March 1 Investor Day event. There’s speculation that it’ll be a lower-priced model, which would open a huge market opportunities. But even now, a cheaper Tesla would face a slew of rival models, including several from BYD.
There are widespread reports that Tesla is working on a Model 3 revamp, with a focus on lowering production costs. The so-called “Highland” project has not been confirmed.
Other Tesla Growth Drivers
Tesla Austin is ramping up Model Y production, with reports that the EV giant already plans a significant expansion.
Tesla Berlin also is picking up production. But that’s a mixed blessing. Tesla Shanghai exports the Model 3 and some Model Y vehicles to Europe, as well as many other markets outside of North America. But as Berlin production increases, Shanghai needs to export fewer Model Ys to Europe.
Shanghai, which ramped up capacity in Q3 2022, didn’t have enough demand in China and its export markets in Q4, slowing and then suspending production at year-end despite an October price cut in China, generous year-end incentives and expiring EV subsidies.
Tesla will enter Thailand in 2023, a few months after BYD. It’ll be a test to see how much demand Tesla can have in middle-income countries besides China. A cheaper Tesla model would likely be helpful in such markets.
Tesla said it will invest $3.6 billion at its Gigafactory outside Reno, Nevada, to mass produce the Tesla Semi and 4680 batteries.
There are often rumors or hints of new Tesla EV plants, with Mexico and Indonesia being the latest sites floated. But it’s unclear that more production capacity is what Tesla needs right now, at least without new models.
The Best EV Stocks To Buy And Watch
BYD 2023 Growth Drivers
BYD continues to rapidly expand its EV and battery production, with more plants in China coming on line in 2023.
BYD is building an EV assembly plant in Thailand and will do so in Brazil. It says it’ll have at least one EV plant in Europe, with reports that it may buy a Ford plant in Germany. But none of those would be 2023 growth drivers.
Like Tesla, BYD reportedly is close to a deal to build an EV plant in Indonesia. That would open a new market for its models and likely gain more access to Indonesia’s raw materials.
BYD will introduce a large number of BEVs and PHEVs across a variety of brands in the coming months.
The BYD Seal, which offers essentially the same dimensions and specs as a Model 3, is ramping up sales. In 2023, BYD is expected to introduced the Sea Lion to take on the Model Y.
BYD’s 90%-owned Denza unit, with prices starting around $50,000, will introduce multiple EV and PHEV vehicles in 2023, including a crossover that will compete with higher-end Model Y trims. They will join a premium D9 minivan.
On Jan. 5, BYD formally launched the super-premium brand Yangwang, which means “look up.” Yangwang also unveiled its the U8 off-road vehicle and U9 sports car. super car, the U9. No word was given on when they may launch. Yangwang may not drive many sales, but could boost the broader BYD brand image and test out advanced technologies that will filter down to Denza and BYD.
BYD also plans another “personalized” premium brand in 2023.
Unlike Tesla and many EV rivals, BYD raised its China prices on Jan. 1, reflecting lost subsidies.
Still, BYD hasn’t forgotten its affordable roots. It’s moving toward launching the Seagull by mid-year. It’s a small EV that likely will start below $9,000.
BYD is in the midst of a massive international expansion. In late 2022, it entered several European countries, as well as Australia, New Zealand, Singapore and Thailand. BYD has begun Atto 3 deliveries in Malaysia and India, with the EV giant entering Japan on Jan. 31, along with several new European countries in early 2023. BYD also is entering Mexico this year, as part of a big push throughout Latin America.
BYD also will introduce additional models, including the Seal, to many new markets during the year.
Exports are still a small share of sales, reaching 11,320 in December. But it’s growing rapidly from almost nothing in mid-2022.
Increasing exports, as well as a huge backlog of orders in key markets, may insulate BYD from China price wars somewhat.
The U.S. is not in BYD’s sights yet for personal vehicles, though it does build EV buses in Lancaster, California.
Five Best Chinese Stocks To Watch Now
Tesla Vs. BYD Batteries
Tesla doesn’t actually mass produce its own batteries. For lithium-ion batteries, its joint venture partner Panasonic makes the cells and Tesla packages them, as well as from South Korea’s LG. Tesla also buys lithium iron phosphate (LFP) batteries from China’s CATL, as well as buying some batteries from BYD.
Tesla is working on 4680 batteries, first touted on the late 2020 Battery Day. The 4680 batteries are standard lithium-ion chemistry, but the larger form factor offers the potential for various benefits and cost savings. Tesla’s 4680 pilot program has picked up output. Despite the big planned Nevada investment, it’s unclear if Tesla has solved key technical hurdles to allow for mass production and cost savings for the 4680 battery.
BYD, meanwhile, is one of the world’s largest EV battery makers. Its Blade batteries, a specialized LFP, are seen as among the safest available. BYD is ramping up battery plants to supply third-party EV makers as well as storage.
BYD, like CATL and some others, is working on sodium-ion batteries. Much less energy dense than lithium batteries, sodium batteries should be much cheaper. That could be useful in smaller EV vehicles as well as energy storage.
Both Tesla and BYD are expanding fast in battery storage for home or business applications or utility-scale projects.
Tesla now uses LFP batteries from CATL for battery storage, while BYD uses its own.
Musk has discussed Tesla getting involved in lithium mining, but hasn’t done so. Tesla has proposed a lithium processing plant in Texas.
BYD is involved in several lithium mining projects already.
Tesla, BYD Other Businesses
Tesla has its own Supercharger network in its markets. That’s especially important in the U.S. and countries like Australia, where third-party charging facilities are limited.
Tesla also has a solar installation business.
Tesla’s self-driving ambitions continue. Autopilot and Full Self-Driving help bolster Tesla’s image of cutting-edge technology, while the $15,000 FSD is a key revenue and profit driver, especially in the U.S. However, even FSD Beta remains a Level 2 driver-assistance system vs. a Level 4 or 5 fully autonomous system.
GM’s Cruise and Google unit Waymo are among those rolling out Level 4 robotaxis in some big U.S. cities, while a large number of Chinese firms are doing the same in China.
U.S. regulators are investigating dozens of crashes involving Tesla Autopilot or FSD amid reports of criminal probes. There is fresh evidence that a 2016 Tesla video claiming to show fully autonomous driving was indeed fraudulent, with Musk directly overseeing the effort. The SEC is now probing Musk’s role in crafting Tesla’s self-driving claims, Bloomberg reported Jan. 28. It’s part of an ongoing investigation into the company’s statements on Autopilot, according to a source.
But no action has been taken vs. the EV giant.
BYD, notably, makes its own chips. That, along with the in-house batteries and other vertical integrations, helped BYD expand rapidly in the past two years as many rivals struggled from chip and other supply shortages.
The EV and battery giant also has solar operations.
BYD’s chairman has said driver-assist systems will be introduced in 2023. But BYD has various autonomous driving initiatives, with Baidu (BIDU), Nvidia (NVDA) and China’s Momenta. BYD says it will use chips from Horizon Robotics in some 2023 models and has a stake in Lidar supplier RoboSense. BYD reportedly is working on in-house Lidar and self-driving chips as well.
BYD Co. is largely known for its BYD Auto operations. BYD Electronics, which accounts for an increasingly smaller share of overall revenue, is involved in mostly low-margin business such as smartphone components and assembly.
Tesla Vs. BYD Earnings
Tesla earnings more than tripled to $2.26 a share in 2021, vs. 75 cents in 2020 and just 1 cent in 2019.
Tesla earnings rose 40% in Q4. That modestly topped analyst views, which were shaved heading into the announcement. Revenue grew 37% beating some forecasts and missing others. Both were robust gains, but the slowest in several quarters.
Tesla’s gross margin slipped to 23.8% from 25.1% in Q3 and 27.4% in Q4 2022. Its automotive gross margin fell to 25.9% from 27.9% in Q3 and 30.6% a year earlier. That was below consensus. Gross margins are expected to fall significantly in 2023 due to the sweeping price cuts. Tesla excludes R&D costs and service center overhead from its gross margin calculations, unlike most automakers. Tesla’s overall gross margin, factoring in only the R&D, would have been 20.4% in Q4.
Tesla said it expects to produce 1.8 million vehicles in 2023, up 37% from last year. But Musk said on the conference call that the internal target is about two million.
BYD earnings are booming again after falling in 2021 amid massive investments. Third-quarter net income jumped 350% vs. a year earlier in local currency terms, with revenue up 116%. Adjusted earnings spiked 923%.
BYD’s gross margin was 18.96% in Q3, up from 14.39% in Q2 and 13.33% a year earlier. BYD Auto gross margin was 22.77% vs. 17.82% in Q2 and 17.31% vs. a year earlier.
With sales and ASPs continuing to ramp up, BYD profits and gross margins likely improved in Q4 vs. Q3.
Tesla Stock Technicals
Tesla stock plunged 65% in 2022, including a 37% dive in December alone, according to MarketSmith analysis. Shares are now up 44.4% in 2023, or 74.7% from its Jan. 6 intraday low.
Shares have vaulted above their 50-day moving average, but are still well below their 200-day line.
BYD Stock Technicals
BYD stock slumped 27.7% in 2022, but is up just over 30% in 2023.
BYD hit record highs in June, but then tumbled. BYD stock hit a fresh bear market low on Nov. 25. Shares have bounced with other China EV makers on reopening hopes.
BYD stock rebounded above its 200-day moving average on Jan. 26, offering an aggressive early entry. Shares kept rising on Jan. 27, but are still in range from the 200-day. BYDDF is still less than halfway up the right side of a long, deep cup base.
Ideally, BYD would forge a long handle or short base within in the upper half of the consolidation.
Warren Buffett’s Berkshire Hathaway (BRKB) has been a longtime major investor in BYD. But Berkshire has sold slices of its H-shares in BYD in seven moves, starting in late August. The latest, on Jan. 3, was disclosed on Jan. 9. Berkshire still owns more than 6% of BYD, based on all share classes.
Tesla Vs. BYD Market Cap
In terms of market cap, Tesla stock vs. BYD stock is still lopsided.
Tesla is worth $561.7 billion as of Jan. 27, well off its peak valuation above $1 trillion but well off early January lows. That’s still far above BYD’s $87.2 billion.
An S&P 500 giant, Tesla stock has an array of institutional sponsors, including many IBD-style mutual funds and other A+ funds. TSLA stock remains a major holding across Ark Invest’s ETFs.
BYD stock has far-less big sponsorship, though Buffett’s Berkshire has been a notable investor for years. Cathie Wood’s Ark also owns a small stake. Very few stocks can boast both Buffett and Wood as investors.
BYD stock is listed in Hong Kong and Shenzhen, and only trades over the counter in the U.S. That also means the BYDDF stock chart shows a lot of minigaps.
Tesla Stock Vs. BYD Stock
BYD is still the upstart vs. Tesla in terms of pure electric vehicles and premium pricing, but the “BEV” title is in sight while the price gap is narrowing. More broadly, BYD in many ways is the EV maker Tesla has claimed or aspired to be. BYD makes its own batteries and chips, and sells those batteries to third parties such as Tesla. Musk has talked about making a $25,000 Tesla; BYD makes EVs profitably at $25,000 — and far less.
With Tesla no longer “production constrained,” it’s shifting to price cuts and incentives to support demand. But it calls into question the super-bull hopes for 20 million EVs sold in 2030. Likewise, skepticism has grown about Tesla’s self-driving efforts.
BYD has expanded in several big markets, with many more planned in the next few months. Its model lineup continues to expand dramatically, and moving upscale
Tesla is entering Thailand, but could use a more-affordable EV to tackle middle-income countries. Tesla may introduce its Cybertruck pickup in 2023, its first new passenger model in over three years, but with a lot of unknowns.
Tesla stock had a horrible 2022, while BYD stock fared badly too. Both need serious repair, along with most other EV makers and related plays.
But both EV giants are delivering far more electric vehicles than rivals. Both have been growing fast with strong profits.
So keep your eyes on BYD and Tesla in 2023, as well as Tesla stock vs. BYD stock.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why This IBD Tool Simplifies The Search For Top Stocks
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
Cathie Wood Has Bet Big On These 10 Stocks; Here’s How They’re Performing
Why This May Be A Life-Changing Rally; 4 Stocks Near Buy Points
The post Tesla Stock Vs. BYD Stock: Tesla Skyrockets On Earnings, Bullish Musk; BYD Flashes Buy Signal appeared first on Investor’s Business Daily.