Tesla (TSLA) and BYD (BYDDF) are the world’s largest electric-vehicle makers. Which one is No. 1 depends on your EV definition.
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.
On April 7, Tesla cut U.S. prices once again, continuing a trend of significant discounts in 2023
Tesla announced big price cuts worldwide in January. Many other China EV makers cut prices in turn, including many BYD. Tesla made further discounts in Europe and slashed U.S. Model S and X prices yet again on March 5.
Tesla earnings are expected to decline in 2023 as the EV giant relies on price cuts to boost demand. BYD, which just released massive Q4 and 2022 earnings growth, should continue to see strong profit gains this year.
Tesla and BYD reported first-quarter vehicle sales on April 2.
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 boomed from Jan. 6, when the latest China price cuts were announced. After consolidating, Tesla stock broke out on March 31, but has tumbled back following deliveries.
BYD stock is up decently in an up-and-down year, facing resistance that could offer an aggressive entry.
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 deliveries for the first quarter came in at a record 422,875, up 36% vs. a year earlier and 4% above Q4’s 405,278. Big Tesla price cuts worldwide and new U.S. tax credits fueled demand.
Wall Street had expected deliveries of 432,000, according to FactSet on Friday. Tesla sales have fallen short of views for several quarters. Deliveries did top some consensus forecasts.
‘Production once again exceeded deliveries, at 440,808. Model S and X output was at 19,437.
The output-to-sales imbalance is a concern, with analysts worried about further Tesla price hikes to support deliveries.
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.
On April 2, BYD reported first-quarter sales were 552,076, up 93% vs. a year earlier but down 19% from Q4’s record 683,440. Sales did pick up to 206,089 in March from February’s 191,664 and January’s 150,164.
Passenger sales — excluding big rigs, buses and heavy equipment — were 547,917 in Q1, with 264,647 BEVs and 283,270 plug-in hybrid vehicles (PHEVs).
Some of the Q1 decline vs. Q4 reflected some Covid impact to start the year, as well as Lunar New Year holidays in late January. But there’s no doubt that the Tesla-led EV price war has taken a toll on BYD, especially vehicles such as the Han and Seal.
Tesla slashed its entry-level Model 3 price by about $7,280 over late October and early January, with several other EV makers including XPeng announcing major cuts as well.
BYD has offered more limited discounts, but has stepped up with sizeable incentives for the Seal. From April 7-30, customers can get up to 31,000 yuan ($4,510) in discounts off the Model 3 rival.
BYD’s upscale Denza brand sold 10,398 D9 minivans in March alone.
Export sales hit 38,725 in the first quarter, providing an escape valve from a brutal home market.
BYD is not just the largest EV and NEV seller in China, it’s the country’s largest automaker, period.
Tesla Price Cuts
Tesla cut U.S. prices on all its EVs on April 7. It reduced Model S and X prices for the third time this year, both by $5,000 in this instance. The Model S starts at $84,990 while the Model X now begins at $94,990.
Meanwhile, Tesla trimmed U.S. Model 3 prices by $1,000 to an entry price of $41,990. The base Model Y was cut $2,000 to $49,990.
Earlier in the week, Tesla also cut Model 3 and Y prices in Australia once again.
Tesla slashed prices in China and Asia on Jan. 6, followed by sweeping cuts in the U.S. and Europe on Jan. 13. The U.S. move also made most Model 3 and Model Y vehicles eligible for new U.S. tax credits of up to $7,500, subject to a variety of conditions. However, the IRS has released battery sourcing rules that will likely reduce tax credits for the entry-level Model 3, which uses China-made LFP batteries. But those credits remain for at least a few weeks.
The global price cuts sparked demand for Tesla Model 3 and Y vehicles, but there had been indications On March 5, Tesla cut Model S prices in the U.S. by $5,000 and Model X prices by $10,000. A few days earlier, the EV giant cut Model 3 and Y prices across Europe by a further 6%.
In China, a slew of rivals have slashed prices, muting the impact of Tesla’s discounts. BYD and rivals also will launch a bevy of new models in the next few months, many of which will target Tesla directly.
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 has handed over a few dozen Semi trucks to Pepsi, but didn’t declare any as deliveries in Q4. It’s unclear how many Semi trucks will be produced in 2023, with key prices and specs unclear.
Tesla reportedly is working on a Model 3 revamp, with a focus on lowering production costs. The EV giant has not yet confirmed the so-called Highland project. Shanghai could start producing a new Model 3 in the third quarter.
After raising Investor Day expectations, Tesla said a new, cheaper EV platform won’t be unveiled until a “later date.” A lower-priced model could open up huge market opportunities. But even now, a cheaper Tesla would face a slew of rival models, including several from BYD.
Tesla did confirm it will build a new EV plan in Mexico, adding that the site will build the next-gen vehicle.
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. That’s a key reason for Tesla’s price cuts across Eurasia.
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 is entering Thailand, following 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.
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. It’s expected to announce plans for another EV plant in Asia outside of China in the next few months, while a Brazil plant seems likely. But none of those would be 2023 growth drivers.
The EV and battery giant resisted the China price war to start 2023, actually raising some prices on Jan. 1. But in late February and early March BYD dealers offered discounts on various models, while the automaker released 2023 models with lower entry prices.
BYD has forecast selling at least three million vehicles for the full year, with hopes for 3.6 million, nearly doubling vs. 2022.
The BYD Seal, which offers essentially the same dimensions and specs as a Model 3, has seen sales slow following Tesla’s multiple big price cuts.
But BYD has trimmed prices, to a lesser extent. Meanwhile, BYD will be launching a large number of BEVs and PHEVs across a variety of brands in the coming months.
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 unveiled a new suspension system on April 10, with the U9 able to jump as well as operate with just there wheels. A variant of the system will appear first on the upcoming Denza N7.
BYD also plans another “personalized” premium brand in 2023, likely starting with a pickup. The “F Brand” is expected to price above Denza but below Yangwang.
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 also launched the 2023 Qin+ DM-i sedan, with a starting price just below 100,000 yuan ($14,650), the first time it’s offered a DM-i PHEV below that key level. BYD touted huge initial orders for the Qin+ DM-i, which is targeting all-gas vehicles.
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. The EV giant has started deliveries in Germany and Japan. BYD also is entering Mexico this year, as part of a big push throughout Latin America.
BYD will introduce additional models, including the Dolphin and Seal, to many new markets during the year.
Exports are still a small share of sales, but growing rapidly from almost nothing in mid-2022.
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 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 in recent months.
But it’s unclear if Tesla has solved key technical hurdles to allow for mass production and cost savings for the 4680 battery. It’s also not clear if some of the battery benefits are coming to fruition.
Tesla reportedly is mulling a new U.S. battery plant with the help of China’s CATL, which provides the bulk of its batteries in China. CATL recently reached a similar deal with Ford.
Tesla will build a new Shanghai facility to make its Megapack battery systems, state media reported April 9.
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, above and beyond its own EV needs.
BYD, like CATL and some others, is working on sodium-ion batteries. Those could be useful in smaller EV vehicles as well as energy storage. It’s possible BYD will include sodium-ion batteries in the upcoming Seagull EV, but has never confirmed that.
Both Tesla and BYD are expanding fast in battery storage for home or business applications or utility-scale projects.
Tesla deployed 6.5 gigawatt hours worth of energy storage in 2022, up 64%. Storage spiked 154% in Q4 to 2.46 GWh. BYD said in mid-December that it had deployed 6.5 gigawatts’ worth of battery storage at that point in 2022.
With Tesla’s auto margins falling, bulls are betting on huge profits from a booming storage business.
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 has agreed to open up 7,500 Superchargers in the U.S. to other EVs.
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 a growing number of big U.S. cities, while a large number of Chinese firms are doing the same in China.
Tesla recently announced a recall on over 362,000 vehicles for FSD flaws that can cause accidents. The EV giant plans on an over-the-air software patch.
U.S. regulators are investigating dozens of crashes involving Tesla Autopilot or FSD, with civilian and criminal probes. 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.
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. 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.
If Tesla is able to substantially boost deliveries in 2023, the higher factory utilization should help offset some of the price-cut impact on gross margins. But if Tesla has to keep cutting prices for incremental delivery gains, that’s a different story.
The U.S. and Australia price cuts are a concern.
Tesla earnings for the first quarter are due late on April 19.
BYD earnings are booming again after falling in 2021 amid massive investments.
On March 28, BYD reported Q4 net profit profit of 7.3 billion yuan ($1.06 billion), up more than 1,100% vs. a year earlier. Revenue swelled 120% to 156.39 billion yuan. For all of 2022, net profit vaulted 446% to 16.6 billion yuan, exceeding the profit of the prior five years combined. Full-year revenue jumped 96% to 424.06 billion yuan. BYD Auto revenue surged 152%.
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 19% in Q4, even vs. Q3. BYD Auto gross margin was 22.8% in Q4, steady vs. Q3. That vs. 17.8% in Q2 and 16.5% vs. a year earlier.
But with BYD stepping up discounts, margins could weaken in 2023.
Tesla Stock Technicals
Tesla stock plunged 65% in 2022, including a 37% dive in December alone, according to MarketSmith analysis. Shares are now up 51.5% in 2023.
TSLA stock hit a 2023 high of 217.65 on Feb. 16, slightly below the 200-day line. Shares consolidated below the 200-day line then broke out of a cup-with-handle base on March 31.
Shares tumbled back below the 200.76 buy point on April 3 following deliveries, and kept falling below the 50-day line. TSLA stock fell more 7%-8% below the buy point, triggering an automatic sell rule for recent buyers.
Tesla has a new handle with a 207.89 buy point. The 200-day line could still serve as resistance, so investors might want to use that as the trigger.
BYD Stock Technicals
BYD stock slumped 27.7% in 2022, but is up 17.6% in 2023.
The stock hit a bear market low on Nov. 25. Shares bounced with other China EV makers on reopening hopes.
BYD stock rose sharply in January, but sold off hard in February and early March, tumbling well below the 200- and 50-day lines. The EV giant is back above the 50-day line as it works up the right side of a bottoming base with a 34.04 buy point. It’s been hitting resistance at the 200-day line. Clearing that could offer an aggressive entry, with 29.96 as a specific trigger.
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 10 moves, starting in late August. The latest, on March 31, was disclosed on April 11. Berkshire still owns about 6% of BYD, based on all share classes, but has cut its stake by more than 40%.
Tesla Vs. BYD Market Cap
In terms of market cap, Tesla stock vs. BYD stock is still lopsided.
Tesla is worth $591 billion as of April 11, off its peak valuation above $1 trillion but well above early January lows. That’s far above BYD’s $78.8 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, including big moves upscale.
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. Tesla has skyrocketed in 2023 and is setting up again. BYD is up modestly for the year but needs to retake key levels.
Both EV giants are delivering far more electric vehicles than rivals. Both have been growing fast with strong profits, though 2023 could see challenges for both.
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
Futures: Jobs Report Looms; Tesla Cuts EV Prices Again
The post Tesla Stock Vs. BYD Stock: Tesla Cuts Prices Again After Deliveries Miss; BYD Faces Key Test appeared first on Investor’s Business Daily.
The post Tesla Stock Vs. BYD Stock: Tesla Cuts Prices Again After Deliveries Miss; BYD Faces Key Test appeared first on Energy News Beat.