Tesla (TSLA) and BYD (BYDDF) are the world’s largest electric-vehicle makers, becoming more direct competitors in China and much of the world. But these rivals are also allies.
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 auto giants such as General Motors (GM), Ford Motor (F) and Volkswagen (VWAGY) also get coverage. However, Tesla and BYD stand apart.
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. BYD has an ever-growing lineup, with EVs from $11,000 to $160,000.
Tesla holds its annual shareholder day on May 16. The EV giant could announce new details on the Cybertruck, a revamped Model 3, a next-generation EV, battery news and more. Or, Elon Musk and his team may not make much move.
Meanwhile, BYD reportedly will start supplying batteries to Tesla, making these two archrivals frenemies too.
Tesla stock boomed in early 2023 after a terrible 2022. After tumbling in April following a failed breakout, TSLA is trying to bounce back, but hitting resistance. BYD has a solid start to 2023, and is in a buy zone.
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 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 four 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.
Model Y sales in the U.S. are strong to start 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.
On May 2, BYD reported April sales of 210,295 vehicles, up slightly from March’s 207,080, but still down substantially vs. December.
Of the 209,467 personal vehicles, BYD sold 104,364 BEVs and 105,103 plug-in hybrid vehicles (PHEVs).
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.
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 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 new U.S. tax credits. All get $7,500 except for the entry-level Model 3, which gets $3,750.
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 has raised U.S. prices slightly twice in May. It’s also slightly raised prices some other key markets, in china. Some Model S and X price hikes have come with Supercharging or cheaper financing. U.S. Model Y demand seems strong Tesla may be trying to get possible buyers to act vs. waiting for further price cuts.
Tesla recently began offering substantial discounts on Model 3 and Y vehicles in many European countries.
Tesla Cybertruck, Model 3 Revamp
The oft-delayed Cybertruck is expected to begin early production sometime this summer. That be the EV maker’s first new vehicle since the Model Y launched in early 2020. But volume production may not begin until 2024, while 4680 battery production issues could limit output. Tesla still hasn’t released Cybertruck prices and specs. The Cybertruck is likely to largely be a North American vehicle, so Tesla may not have a new vehicle for most markets until 2025 or beyond.
Tesla is close to starting trial production of a revamped Model 3 in Shanghai, Bloomberg reported May 16. It’s unclear when real output will begin in China and later in the U.S.
Tesla has said it plans to have a new, next-generation EV, but hasn’t even shown images yet. Tesla plans to to build an EV plant in northeastern Mexico that will make the next-gen vehicle. A lower-priced model could up huge new markets. But even now, a cheaper Tesla would face a slew of rival models, including several from BYD.
There’s speculation that Tesla could provide key details on the Cybertruck, Model 3, next-generation vehicle and more at the May 16 shareholder day. But perhaps the event will make little news.
Tesla has handed over a few dozen Semi trucks to PepsiCo (PEP) starting late last year, but has declared any Semi deliveries yet. Big-rig makers’ key customers often run new models through extensive shakedown trials. That may be what Tesla and Pepsi are doing, but with a lot more publicity.
Tesla Production
Tesla production capacity continues to ramp up its Berlin and Austin plants after significantly expanding its mammoth Shanghai factory last year. But demand hasn’t kept up with expanded output, even with Tesla slashing prices and curbing production below capacity.
With Berlin ramping up and backlogs dwindling, Tesla Shanghai no longer needs to export many Model Y vehicles to Europe. It’s now exporting some made-in-China Model Y and 3 vehicles to Canada. But that comes at the expense of Tesla’s U.S. plants.
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.
Tesla aims to produce 1.8 million vehicles in 2023, though capacity is higher. It has not set a delivery target.
BYD Expansion
BYD is ramping expanding EV and battery production, with more China plants coming on line this year. It’s already building a EV factory in Thailand, with that set to begin production in 2024. Vietnam said on May 8 that BYD will make EVs in that country as well. BYD also is expected to build or buy plants in Europe and Brazil. It’s also possible that it will set up a factory in Indonesia or the Philippines,.
BYD has forecast selling at least three million vehicles for the full year, with hopes for 3.6 million, nearly doubling vs. 2022. Sales are well off that pace so far, in part due to the China EV price spurred by Tesla.
But BYD has hopes for ramping up sales.
BYD has unveiled several new models. The small Seagull starts at around $10,700, with deliveries starting around mid-year. The Destroyer 07 mid-size PHEV sedan will probably start around $30,000. BYD’s upscale Denza brand will release the N7 crossover over the summer, with a price target likely at $50,000 or above. BYD’s super-premium brand Yangwang said its U8 off-road vehicle will start at $160,000, with deliveries beginning in the third quarter.
BYD also plans another “personalized” brand in 2023, likely starting with a pickup. The “F Brand” is expected to price above Denza but below Yangwang.
A newly updated BYD Seal comes with substantially lower prices.
BYD is expanding massively overseas. Thailand has become a big market, but has entered many Asian countries, including Japan, India, Malaysia, Australia, Singapore and more. It’s also entered most European countries. BYD also is entering Mexico this year, as part of a big push throughout Latin America.
BYD has led its export push primarily with the Atto 3 small SUV, but will add more models overseas in the coming month, including the Dolphin hatchback and Seal sedan.
Exports are still a small share of sales, but growing rapidly from almost nothing in mid-2022.
BYD has said it doesn’t yet plan to enter the U.S. market for personal vehicles, though it does build EV buses in Lancaster, California.
Five Best Chinese Stocks To Watch Now
Tesla Vs. BYD Batteries
Tesla traditionally has not mass produced its own batteries. For lithium-ion batteries, its joint venture partner Panasonic makes the cells and Tesla packages them. It also buys lithium-ion batteries from South Korea’s LG. Tesla also has bought lithium iron phosphate (LFP) batteries from China’s CATL.
Tesla is working on 4680 batteries, first touted in late 2020.
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.
Panasonic, which was going to help ramp up 4680 production, on Wednesday pushed back output to the second-half of 2024 vs. late 2023.
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
BYD, meanwhile, is one of the world’s largest EV battery makers. Its Blade batteries are a specialized LFP. BYD is ramping up battery plants to supply third-party EV makers as well as storage, above and beyond its own EV needs.
In fact, Tesla reportedly will use BYD battery packs for a lower-range Model Y variant at its Berlin plant. That follows months of unconfirmed BYD Blade supply deals with Tesla.
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 reported that BYD will offer sodium-ion batteries in the Seagull EV down the road, further cutting the cost.
Both Tesla and BYD are expanding in battery storage for home or business applications or utility-scale projects, though Tesla gets its batteries from CATL.
With Tesla’s auto margins falling, bulls are betting on huge profits from a booming storage business.
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 source of revenue and profit, 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. U.S. regulators are investigating dozens of crashes involving Tesla Autopilot or FSD, with civilian and criminal probes.
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 will introduce Level 2 driver-assistance systems in its Yangwang and Denza vehicles, as well as some BYD-brand EVs. It has relationships with Baidu (BIDU), Nvidia (NVDA) as well as China’s Momenta, Horizon Robotics and RoboSense.
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 per share fell 21% in the first quarter vs. a year earlier, in line with views. Revenue grew 24% to $23.3 billion, slightly missing.
Tesla’s gross margin tumbled to 19.1%, worse than expected, from 23.8% in Q4 and 29.1% a year earlier.
Auto gross margins excluding regulatory credits and leases skidded to 18.3% from 23.8% in Q4. Tesla had said 20% would be a “floor” for this metric in 2023.
Free cash flow tumbled 80% vs. a year earlier to $441 million vs. expectations for $3.2 billion. Tesla had negative cash flow excluding $521 million in auto regulatory credits.
Musk said that he’s going to stress higher production over margins, indicating further price cuts could be ahead. He said Tesla will reap higher margins when it achieves full sell-driving. Musk said he expects Tesla to achieve full autonomy in 2023. He’s forecast full autonomy for several years.
BYD earnings are booming.
On April 27, BYD reported Q1 net profit surged 411% vs. a year earlier, while revenue jumped nearly 80%. But earnings and sales were down substantially vs. Q4 2022. Some of that reflects a seasonally slow first quarter, which includes China New Year. But it also reflects the impact of a fierce China EV price war.
BYD’s gross margin was 17.9% in Q1, down from 19% in the prior two quarters. BYD Auto gross margin was 20.7%, down 22.8% in the prior two quarters but up from 15.6% in Q1 2022.
Tesla Stock Technicals
Tesla stock plunged 65% in 2022, according to MarketSmith analysis. Shares are now up just over 35% in 2023.
TSLA stock hit a 2023 high of 217.65 on Feb. 16. A brief breakout on March 31 quickly failed following deliveries, with shares continuing to slide below the 50-day line. After tumbling to a three-month low, TSLA stock is trying to recover, but still below the 21-day, 50-day and 200-day lines. Tesla hit resistance at the 21-day and near the 50-day line on May 12.
Elon Musk on May 12 announced that Linda Yaccarino, who just stepped down as NBC Universal’s ad chief, will be Twitter CEO. That may give Musk more time to focus on Tesla, though he’ll still be actively involved with the social site.
If Tesla stock makes some upward progress, it’ll have a 207.89 buy point from a double-bottom base. The base has formed below the 200-day line, but the buy point is now above the long-sliding 200-day.
BYD Stock Technicals
BYD stock slumped 27.7% in 2022, but is up 28.7% in 2023.
Shares 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 has recovered again. On May 10, BYD stock cleared a cup-with-handle base buy point of 31.17 on May 10. After wavering, shares are back in a buy zone.
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 11 moves, starting in late August. The latest, on May 2, was disclosed on May 8. Berkshire still owns about 5% of BYD, based on all share classes, but has halved its stake.
Tesla Vs. BYD Market Cap
Tesla stock has a market cap of $527.2 billion as of May 15, off its peak valuation above $1 trillion but well above early January lows. That’s far above BYD’s $86.3 billion.
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 that effort key to its efforts to be a global auto giant. 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 surged to start 2023, but is hitting resistance currently. After some ups-and-downs, BYD stock is above a buy point.
Both EV giants are delivering far more electric vehicles than rivals. Tesla profits have recently faltered. BYD earnings continue to surge vs. a year earlier, but the price war may also slow growth.
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
U.S.-China Tech Cold War Heats Up As Beijing Returns Fire
Why This Market Is So Dangerous. What To Do Now.
The post Tesla Vs. BYD 2023: Tesla Model 3 Revamp In Focus With EV Rival In Buy Zone appeared first on Investor’s Business Daily.
The post Tesla Vs. BYD 2023: Tesla Model 3 Revamp In Focus With EV Rival In Buy Zone appeared first on Energy News Beat.
Energy News Beat