Tesla (TSLA) and BYD Co. (BYDDF) are both fast-growing EV giants. While a lot of attention falls on startups such as Rivian Automotive (RIVN), Lucid (LCID), Nio (NIO), Xpeng (XPEV) and Li Auto (LI), as well as traditional automakers pushing into EVs, such as General Motors (GM) and Ford Motor (F), Tesla and BYD are setting the pace.
“For the first time, I think there is a real challenger and that challenger’s name is BYD,” Steve Westly, a former Tesla board member, told CNBC on Oct. 20. He noted that BYD will sell nearly 1 million fully (battery) electric vehicles (BEVs) in 2022.
Including plug-in hybrids, BYD has surged past Tesla sales. It’s closing the gap on BEVs.
On Nov. 16, BYD saw its 3 millionth new energy vehicle roll off the production line. It took 13 years to reach 1 million fully electric vehicles and plug-in hybrids, then a year to reach 2 million. It’s taken just six months to go from 2 million to 3 million.
Tesla, which is ramping up production, is cutting prices and offering other subsidies in China to boost demand.
CEO Elon Musk keeps making headlines with his tweets and big changes at his newly acquired Twitter. Musk disclosed new share sales in recent days, while even long-term bulls are worried that Musk’s “Twitter circus” is hurting the Tesla brand.
Tesla hit a fresh bear-market low on Nov. 18.
BYD stock is off a 52-week low, but has a long way to go.
Let’s take a look at Tesla vs. BYD — and Tesla stock vs. BYD stock.
Tesla reported Q3 deliveries of 343,830 cars, up 42% vs. a year earlier and above Q1’s record 310,048. But that was below analysts’ estimates of above 360,000. Tesla produced 365,923 vehicles in the latest quarter, more than 22,000 above deliveries.
Tesla cited logistical challenges and vehicles in transit for the deliveries shortfall. But that appeared to reflect a last-minute shift to exporting Shanghai-made vehicles early as China demand slowed.
Tesla delivered 325,158 Model 3 and Model Y vehicles in Q3, along with 18,672 Model S and Model X luxury EVs.
For Q3, BYD sold 538,704 new energy vehicles, up 194% vs. a year earlier and surging from 355,021 in Q2. The Chinese giant nearly doubled its overall vehicle lead over Tesla in Q3 vs. Q2. The U.S. EV maker still leads in pure electric vehicle (BEV) deliveries, but BYD sold 258,610 pure electrics in Q3, rapidly closing that gap.
On Nov. 3 BYD reported it sold a record 217,816 vehicles in October, the eighth straight month of record sales and up 169% vs. a year earlier. Of the 217,518 personal vehicles, BEV sales leapt 150% to 103,157. Plug-in hybrid sales spiked 195% to 114,361.
BYD’s plug-in hybrids offer electric-only range of at least 50 miles, often far more.
Tesla opened its plants near Berlin, Germany, and Austin, Texas in March and April, respectively. Model Y production remains sluggish for those sites, but is slowing improving.
Just-finished upgrades to the Tesla Shanghai facility significantly boosted production capacity, though that impacted output in July and early August.
But Tesla China demand is struggling to keep up with increased output. Tesla China wait times fell to virtually nil in September. Tesla introduced an insurance subsidy in mid-September. From Oct. 1, Tesla has offered 0% down payments and preferential loan rates. Those incentives served as de facto price cuts.
Tesla cut actual Model 3 and Model Y prices in China on Oct. 24 by as much as 9%. Notably, the Model Y SR price was cut to just below the 300,00 yuan limit for subsidies. The government subsidies are set to expire on Dec. 31, but that should provide an extra boost to local sales in Q4.
Tesla briefly eliminated the insurance subsidy following the late October price cuts, but reintroduced it as of Nov. 8, though only for vehicles in inventory. It’ll give an 8,000 yuan ($1,107) insurance subsidy through the end of November, then 4,000 yuan in December.
The Tesla price cuts have already spurred some other EV makers to cut China prices. That could intensify, especially after subsidies end on Dec. 31.
Tesla Shanghai sold 71,704 vehicles in October, according to the China Passenger Car Association. That’s up 32% vs. a year earlier earlier but down nearly 14% from 83,135 in September. Tesla exported 54,504 vehicles, while selling 17,200 locally.
Tesla Shanghai production data isn’t out, but one brokerage pegged October output at 87,706, signaling an inventory boost of 16,000 vehicles in a single month.
Tesla production should be much higher in Q4 vs. Q3, especially at Shanghai, so global demand will also need to ramp up.
Tesla will export even more Shanghai vehicles to ease local demand concerns. However, that could drain European backlogs. In August, Tesla began selling a new low-end Model Y in Europe that’s much cheaper than the prior base Y.
Germany will reduce EV subsidies as of Jan. 1. Tesla has said it will cover the 2,000 euro ($2,000) difference for people who order a Tesla before year-end but don’t receive delivery.
BYD also is adding significant EV and battery capacity.
The auto giant’s NEVs deliveries should easily top 1.8 million, with 1.9 million quite possible.
BYD is targeting 280,000 vehicle deliveries a month by year-end, Chairman Wang Chuanfu said on Sept. 2. He set a 2023 delivery goal of 4 million, but that may be conservative given BYD’s likely run rate at the end of 2022.
Tesla, targeting the luxury and affordable luxury markets, has far higher selling prices than BYD.
The majority of BYD’s EVs and hybrids sell for $15,000-$34,000, though a growing number top $40,000. Overall selling prices are on the rise.
The China EV giant also plans plan to move upscale significantly.
BYD’s Denza unit, 10% owned by Mercedes-Benz, targets the affordable luxury space. just began deliveries off its D9 minivan in late October. Coming in EV and PHEV variants, it starts at just under $50,000.
A Denza SUV should launch in early 2023, taking on the Tesla Model Y and various Nio EVs, Li Auto hybrids and many more.
BYD also plans to launch two more brands in 2023.
The first, called Yangwang, which means “looking up,” will target the luxury market for 800,000 yuan ($110,300) or more, starting with an off-road SUV.
BYD also will launch a personalized brand next year, with few details given. But the brand may target pickup trucks, according to local media, with fully electric and hybrid options.
Tesla produces four electric vehicles: the luxury Model S sedan and Model X SUV as well as the Model 3 sedan and Model Y crossover. The vast majority are the Model 3 and Model Y, with the Model S and X largely limited to North America for now.
The Roadster, Semi and Cybertruck have been pushed back multiple times. Musk says the Cybertruck is on track for “early” production mid-2023, with a Reuters report saying mass production will start at the end of 2023.
Tesla is finally hiring specifically for the Cybertruck.
But prices and specs — ambitious even compared to other Tesla vehicles — will likely be different from the initial Cybertruck claims back in 2019, he says.
Musk tweeted on Oct. 6 that the Tesla Semi, first unveiled in 2017, has begun production and will start deliveries to PepsiCo (PEP) on Dec. 1. He said the Semi will have a 500-mile range. But many key specs, such as effective range with cargo, the price tag and more, are still unclear. Notably, the Tesla Semi will not use 4680 batteries.
It’s also unclear if the Semi will be produced in volume or in token amounts.
The Cybertruck likely will largely serve the U.S. market. So Tesla may not have a new passenger EV for most of the world until 2024 or later.
An aging model lineup could be a factor going forward, especially in China.
Musk says Tesla is working on a much-cheaper, smaller EV, signaling a possible return to a long-touted goal of a $25,000 vehicle. However, he gave no timeline. Even now, such a model would run into dozens of existing rivals, mostly from Chinese EV makers such as BYD.
BYD has a slew of models, some with electric and hybrid versions. The automaker is rolling out several new EV-only and hybrid-only models in the next several months.
The Seal sedan is BYD’s first clear head-to-head competition vs. Tesla. The BYD Seal has roughly equal dimensions and range to a Model 3 — and is far cheaper. The Seal starts at 212,800 RMB ($29,617) vs. 265,900 RMB ($37,007) for a made-in-China Model 3, even after Tesla’s price cuts.
Many EV makers are likely to cut prices in early 2023, after China subsidies end.
BYD started Seal deliveries in late August, with deliveries reaching 11,267 in October. Production is set to keep ramping up and will reach many overseas markets in 2023.
BYD recently unveiled the Frigate 07, a mid-sized SUV that’s the second model in the Warship line of plug-in hybrids. The Destroyer PHEV sedan launched this spring and continues to increase sales.
BYD also is one of the biggest makers of electric buses, with plants in the U.S. and many other countries besides China. BYD also makes EV delivery trucks, big rigs, garbage trucks and more.
BYD makes buses, big rigs and other heavy vehicles for the U.S. market at its Lancaster, Calif., plant.
Tesla is a global EV giant, with major sales in North America, Europe and China. It has notable business in Korea and some other Asian markets. It has four plants, starting with Fremont, Calif., and Shanghai, joined by the Austin, Texas, and Berlin-area plants. Tesla already exports to Europe, mostly from Shanghai.
As the Berlin plant ramps up, the Shanghai plant will export fewer Model Ys to Europe, though Model 3 shipments will likely continue.
While Tesla capacity is soaring, it has no major new markets to enter or new passenger EVs in the near future.
The U.S. recently approved new EV tax credits. Tesla, no longer eligible under the old program, should be a winner. Income and vehicle price caps will limit some Tesla vehicles’ and buyers’ eligibility. A requirement for a high and rising share of battery materials and components from North America also could complicate matters.
But, if nothing else, the new rules — which mandate assembly in North America — cut off tax credits to many Tesla rivals.
BYD’s auto plants are in China, with virtually all its sales there, but those are both changing.
BYD will build a manufacturing plant in Thailand. The export-focused plant should be running in 2024 with annual production capacity of 150,000 vehicles.
BYD has deal in northeastern Brazil to build three plants, including one for passenger vehicles. The plants will begin operation in 2024-2025.
BYD’s exports rose to a fresh high of 9,529 in October, up from 7,736 in September and 4,026 in July. Exports should keep surging in the next several months.
BYD has started Atto 3 deliveries in New Zealand, Australia and Singapore. The Atto 3 is the Yuan Plus’ name for most overseas markets. Several other Asian countries will follow in the next few weeks and months.
BYD this quarter is starting deliveries across much of Europe, starting with the Tang SUV, the Han sedan and the Atto 3. BYD has been selling the Tang SUV in Norway since late 2021. BYD set European pricing well above the sticker price for those vehicles in China, suggesting the automaker is looking to establish itself as a premium or near-premium brand on the Continent.
BYD in early October agreed to sell more than 100,000 EVs to German car rental giant SIXT over six years. That follows Tesla and GM EV deals with Hertz (HTZ). SIXT says it will order several thousand BYD EVs to start.
The BYD Seal will hit Europe in 2023. The compact Dolphin also could join BYD’s European lineup.
BYD will begin Atto 3 deliveries in Thailand soon and in India next year.
The EV giant will enter Japan with the Atto 3 in early 2023, the Dolphin/Atto 2 mid-year and Seal/Atto 4 in late 2023.
BYD is increasing its sales in Latin America, ramping up in Brazil in particular.
Each of these markets will have specific challenges in terms of regulations and tastes. BYD had to halt Australia deliveries for several weeks related to the location of child safety seat anchor.
America isn’t officially in BYD’s sights in terms of personal EVs. Tariffs on China-made autos make exports to the U.S. cost prohibitive. BYD does make some EV buses here, with a lot of extra space at its Lancaster, Calif., site outside Los Angeles.
Tesla doesn’t mass produce battery cells. The Sparks, Nevada, gigafactory is a joint venture with Panasonic, which makes the cells. In China and increasingly in the U.S., Tesla buys off-the-shelf batteries from CATL.
It’s increasingly shifting to lithium iron phosphate batteries. LFPs have some cost advantages, which have grown because they don’t require any cobalt or nickel, unlike lithium-ion batteries.
Tesla has long led in getting more out of its batteries, though the high-end Lucid Air has higher battery efficiency than Tesla.
Tesla is developing its own 4680 battery cells in a pilot program. The 4680 batteries don’t involve new chemistry. The larger form factor offers the potential for cost savings, but technical challenges remain.
BYD batteries, by contrast, are truly in house. The BYD Blade batteries, a specialized LFP battery, are seen as among the safest available for EVs.
BYD is now supplying Blade batteries to Tesla Berlin. It’s a major validation, as BYD aims to be a major battery supplier to third-party automakers.
The made-in-China Ford Mustang Mach-E uses BYD batteries.
Toyota (TM) will use BYD batteries and motors in an upcoming small EV for the Chinese market, the bZ3. BYD may be actively involved in Toyota’s wider EV push in the coming years.
BYD and Tesla are on the forefront of automakers trying to lock up supplies of lithium and other key battery raw materials.
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 and BYD are more than just EV makers.
Tesla has solar and battery storage businesses, but both are a small part of total revenue.
Tesla also generates revenue via its Supercharger network. It’s starting to open its Supercharger network to non-Tesla vehicles in parts of Europe, where third-party charging stations are common. In the U.S., the Supercharger network is still a big moat for Tesla, but the automaker may open at least some stations to attract new subsidies.
Tesla’s self-driving efforts have been a key revenue driver and brand builder. If Tesla is able to create a cheap, vision-only system that is fully autonomous, the payoff will be huge. But Full Self-Driving is not full self-driving. Even FSD Beta is a Level 2 driver-assist system, while many U.S. and China rivals are starting to roll out Level 4 robotaxi services in select urban areas.
The Justice Department reportedly is conducting a criminal probe of Tesla’s self-driving claims. The investigation, which started in 2021, is not close to a conclusion. The SEC has a civil probe of Tesla’s claims. The California DMV in July accused the EV giant of misleading customers about Autopilot and FSD.
The National Highway Traffic Safety Administration has expanded an Autopilot probe multiple times, looking into crashes into stationary emergency vehicles, “phantom braking,” in-cabin cameras and even how Tesla assembles reports that claim to show Autopilot’s safety benefits.
Still, Tesla raised the price of FSD in North America to $15,000 from $12,000 in early September.
An Optimus robot prototype was unveiled at Tesla AI Day on Sept. 30, with limited mobility. Musk said Optimus should go on sale in 3-5 years for less than $20,000. Most experts say general purpose humanoid robots are decades away.
BYD makes its own chips, which has helped it rapidly expand over the past year while the industry had to idle production.
The company also has solar and energy storage businesses, as well as a variety of other operations.
BYD’s chairman has said driver-assist systems will be introduced in 2023. But has various autonomous driving initiatives, with Baidu (BIDU), Nvidia (NVDA), China’s Momenta. BYD says it will use chips from Horizon Robotics in some 2023 models and has a stake in Lidar supplier RoboSense.
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 69% in Q3 while revenue grew 56%, but the top-line gain fell short.
Tesla’s gross margin was 25.1%, with an automotive margin of 27.9%, both roughly flat vs. Q2 but down from a year earlier. Tesla excludes R&D costs and service center overhead from those figures. Overall gross margin including R&D costs was 21.7%.
On the earnings call, Musk said demand remains strong and that Q4 will be “epic.” But he also said the China and Europe are experiencing some economic weakness, suggesting that’s having some impact on demand.
With production set to surge in Q4, Tesla said it will make more vehicles than it deliveries for a second straight quarter. It says that’s intended to ease logistic challenges and costs.
BYD earnings declined in 2021. Capital spending last year exceeded capex from 2018-20 combined, with huge outlays for new auto, battery and chip plants. EV and PHEV production capacity has surged and continues to increase. With sales skyrocketing, and BYD’s selling prices rising, that is spurring massive revenue and profit gains this year.
On Oct. 28, BYD reported 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. Automotive gross margin was 22.77% vs. 17.82% in Q2 and 17.31% vs. a year earlier.
Tesla stock is down 48.8% this year as of Nov. 18, according to MarketSmith analysis. BYD stock is off 30.5% after tumbling from its late June record highs.
TSLA stock hit a record 414.46 in November 2021.
Tesla stock tumbled to bear-market lows of 177.12 on Nov. 9, breaking decisively below a June bottom to hit a two-year low.
Musk on Nov. 8 disclosed he sold 19.5 million Tesla shares for $3.95 billion on Nov. 4, 7 and 8, likely to help pay for his just-closed Twitter takeover.
Meanwhile, Musk’s headline dominance since taking control of Twitter in late October could be a factor. He has slashed staff, antagonized key Tweeters and made some controversial tweets of his own.
Wedbush analyst Dan Ives, a long-time Tesla bull, warned on Nov. 10 that the “Twitter circus,” is a “dark comedy” that undermines Tesla’s brand. Musk has continued to tweet, trolling everyone from a U.S. senator to his own Twitter employees.
On Nov. 17, half or more of Twitter’s remaining employees chose not to go along with his latest demands for continued employment. That’s raising concerns about the Twitter site.
Tesla stock, which hasn’t closed above its 21-day line since Sept. 21, is falling back toward its Nov. 9 low.
Berkshire has sold small slices of its H-shares in BYD in four moves first in late August and early September, then again on Nov. 1 and Nov. 8, with the latter being disclosed on Nov. 11.
Berkshire still owns around 7% of BYD, based on all share classes.
BYD stock rebounded modestly from a 52-week low in late October, but is below its 21-day line after hitting resistance at the 50-day.
In terms of market cap, Tesla stock vs. BYD stock is no contest. Tesla is worth $569 billion. That’s leagues above BYD’s $64.4 billion.
An S&P 500 giant, Tesla stock has an array of institutional sponsorship, 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.
In many ways BYD is what Tesla claims or aspires to be. BYD makes its own batteries and chips, as well as many other key parts. It’s selling its batteries to other automakers, including Tesla itself. Musk has long touted a goal of a $25,000 Tesla. BYD already sells many EVs at or below $25,000, and at a profit. Musk has mulled getting involved in lithium mining. BYD already is.
BYD’s EV and PHEV unit sales have raced past Tesla’s unit sales, with the automaker accelerating production and moving toward more-upscale offerings. For now, Tesla sells more far more pure electrics than BYD and at much-higher price points. But the BEV gap is rapidly narrowing, while BYD’s average prices are trending up. Both are reporting booming earnings.
BYD is expanding into several big markets, with several more in the next few months.
Both EV giants are delivering far more electrified vehicles than rivals.
Tesla stock and BYD stock were among the biggest EV winners in 2021. Both are down sharply in 2022 and need serious repair.
So, Tesla stock vs. BYD stock? Investors should keep their eyes on them.