Sunday, May 26

BYD beating Tesla in EV Game

New York, 23rd March 2024: BYD is making significant strides in overtaking Tesla as the leading battery-electric vehicle producer globally.

Following another upgrade, Wall Street is showing interest as the stock price of BYD saw an increase on Monday.

In November, the Chinese EV manufacturer reported delivering over 301,000 passenger vehicles, marking a 31% year-over-year growth. Of these, over 170,000 were all-battery electric vehicles (BEVs), showing an almost 50% increase from the previous year. Additionally, BYD also delivered approximately 131,000 plug-in hybrid vehicles.

During the first two months of the fourth quarter, BYD recorded almost 336,000 BEV deliveries, marking a 55% increase compared to the previous year.

With this growth trajectory, BYD is on track to deliver over 500,000 BEVs in the fourth quarter, surpassing Tesla’s expected delivery of about 475,000 units. This would be the first time Tesla falls behind another EV manufacturer since its inception.

By the end of November, BYD had delivered close to 2.7 million vehicles in 2023, with nearly 1.4 million of them being BEVs. While Tesla is projected to retain the top spot for the full year, BYD is expected to deliver between 1.6 million and 1.7 million BEVs, a significant increase from the 911,000 delivered in 2022. Tesla, on the other hand, is estimated to sell around 1.8 million vehicles, up from 1.3 million in 2022.

BYD’s robust business execution has impressed Wall Street analysts, with 94% of them recommending a Buy rating for the company, compared to Tesla’s 44%. The key differentiator driving this gap is the valuation, with Tesla trading at around 60 times the estimated 2024 earnings, while BYD is traded at less than 15 times earnings.

J.P. Morgan analyst Nick Lai recently upgraded BYD’s shares to Buy from Hold, setting a price target of approximately $70 for BYD’s U.S.-listed American depositary receipts, trading under the symbol “BYDDY.” Lai highlighted BYD’s record-high profitability and low valuation as reasons for the upgrade, foreseeing strong margins for the company in the upcoming quarters.

In the third quarter, BYD reported a gross profit margin of about 22%, up from 19% in the same period in 2022.

During midday trading, BYD’s ADRs rose by about 1%, while Tesla’s stock declined by 1.2%. The S&P 500 and Nasdaq Composite were also down by approximately 0.7% and 1.1%, respectively.

Although Tesla’s drop in stock price may not be directly correlated with BYD’s recent accomplishments, it emphasizes the gap in Tesla’s product lineup.

BYD is anticipated to generate $88 billion in sales for 2023, translating to around $29,000 per car sold. In comparison, Tesla’s per-car revenue stands at approximately $54,000.

The disparity in revenue is attributed to BYD’s focus on selling lower-priced vehicles, a market segment that Tesla has yet to tap into with its cheapest offering, the Model 3, starting at $37,000 in China.

To maintain its market share, Tesla will need to diversify its product range, with plans for a more affordable Tesla vehicle expected to hit the market by late 2024 or 2025.