Tesla Stock Vs. BYD Stock: Tesla Rival Unveils Two Super-Premium EVs
Tesla (TSLA) and BYD (BYDDF) are the world’s largest electric-vehicle makers. Which one is No. 1 depends on your EV definition.
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A lot of attention is focused on EV startups such as Nio (NIO), Li Auto (LI), Xpeng (XPEV), Rivian (RIVN) and Lucid (LCID). Also, on traditional automakers such as General Motors (GM) and Ford Motor (F). 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 closing the gap. Tesla boasts premium pricing, but that pricing is coming under pressure heading into 2023. BYD has lower average selling prices, but is moving up the price scale.
On Jan. 5, BYD launch its Yangwang premium brand and unveil its first two models, both starting at 1 million yen, or $145,000.
Tesla and BYD also have other notable operations, including battery storage and solar.
But 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, tumbling again to start 2023. BYD stock also didn’t have a good 2022 but is trying to recover.
Let’s take a look at BYD vs. Tesla, as well as BYDDF stock vs. TSLA stock.
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Tesla Vs. BYD Sales
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 nearly all the rest, along with 36 Tesla Semi trucks.
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. He said full-year deliveries would be around 1.88 million, implying December deliveries around 247,000. The actual December and full-year sales suggest a greater Covid impact than BYD anticipated on Dec. 22.
Tesla 2023 Growth Drivers
In the U.S., the Austin plant is ramping up Model Y production. 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, which currently starts at $65,990, also faces a $55,000 price cap for tax credits. The seven-seat Model Y has an $80,000 cap. The seven-seat variants have been a small share of Y sales, with the third row of seats offering limited headroom and reducing cargo space.
Tesla could introduce lower-range variants, simply cut prices and produce more seven-seat Model Ys. It’s unclear how Tesla will respond to maximize the tax credit benefit.
Big year-end U.S. discounts on all Model 3 and Y vehicles — and even S and X EVs at the last minute — might have pulled forward some of the demand boost from the tax credits.
Meanwhile, the Cybertruck is slated to arrive in 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 will begin « early production » in midyear, according to Elon Musk. Other reports say the Cybertruck will begin mass production in late 2023. The Cybertruck may not have significant deliveries in 2023, and could slip into 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. There are reports that Tesla will do a major overhaul of its aging Model 3, but that hasn’t been confirmed.
Elon Musk has long touted a goal of a $25,000 EV. A so-called Model 2 has been rumored for years, with the latest reports or speculation that it could come in 2024. Even now, a cheaper Tesla would face a slew of rival models, including several from BYD.
Meanwhile, Tesla Berlin also is ramping up. 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, Tesla 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. That’s despite an October price cut in China and some generous year-end incentives, as well as China EV subsidies expiring Dec. 31.
Tesla has absorbed the lost subsidy cut to keep official prices unchanged, while extending incentives into 2023.
Over in Europe, Norway ended its EV subsidies while Germany cut its own EV breaks, along with some other countries. European backlogs are coming down fast as well.
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.
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BYD 2023 Growth Drivers
BYD continues to rapidly expand its EV and battery production, with more plants coming on line in 2023. BYD is building an EV assembly plant in Thailand and will do so in Brazil. It says it’ll build at least one EV plant in Europe. But none of those will be operational in 2023.
BYD will introduce a large number of BEVs and PHEVs across a variety of brands.
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 vehicles in 2023, including a crossover.
On Jan. 5, BYD formally launched a super-premium brand called Yangwang, which means « look up. » Yangwang also unveiled its first model, the U8 off-road vehicle. In a surprise, it also showed off a super car, the U9.
Both use the new e4 system, in which the four motors independently drive the four wheels. Yangwang says that’ll offer more precise driving and add safety.
The U8 off-road vehicle can crab walk for difficult terrain.
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.
BYD is in the midst of a massive international expansion. In late 2022, it entered several European countries, as well as Australia, New Zealand and Singapore. Japan, India, Thailand, Malaysia and several more European countries are on tap for early 2023, while BYD also will introduce additional models to many new markets during the year. BYD also is entering Mexico this year, as part of a massive expansion throughout Latin America.
Exports are still a small share of sales, reaching 11,320 in December. But it’s 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.
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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. Tesla also buys lithium iron phosphate (LFP) batteries from China’s CATL and South Korea’s LG, 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. But Tesla doesn’t appear to have solved key technical hurdles to allow for mass production.
BYD, meanwhile, makes its own batteries. 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 uses LFP batteries from CATL, while BYD uses its own batteries.
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., where 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. 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 struggle 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 Earnings
Tesla earnings more than tripled to $2.26 a share in 2021, vs. 75 cents in 2020 and just 1 cent in 2019.
Q3 2022 Tesla earnings rose 69% while revenue grew 56%. However, 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%.
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. Automotive 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 in Q4, BYD profits and gross margins likely improved vs. Q3.
Tesla Stock Technicals
Tesla stock plunged 65% in 2022, including a 37% dive in December alone, according to MarketSmith analysis.
Tesla crashed last year amid demand concerns, especially in China. It’s only recently that Tesla analysts have acknowledged China competition, even naming specific rivals such as BYD.
Tesla stock plummeted on Jan. 3 in the wake of the weak delivery figures, suffering their worst one-day loss in more than two years. Shares hit their lowest level since August 2020. TSLA stock bounced on Jan. 4.
Another big driver for the Tesla stock sell-off in recent months has been Elon Musk and Twitter. Since buying Twitter for $44 billion, concerns have grown about Musk’s focus on the social site and increasingly political tweets. That risks tarnishing Tesla brands, especially among the upscale urban Democrats that have been the EV giant’s top customers.
BYD Stock Technicals
BYD stock slumped 27.7% in 2022.
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 hopes Covid is easing in China.
Shares have rebounded from their 50-day line to start the new year, but are still some distance from the 200-day.
Warren Buffett’s Berkshire Hathaway (BRKB) has been a longtime major investor in BYD. But Berkshire sold slices of its H-shares in BYD in six moves, starting in late August. Berkshire still owns more than 6% of BYD, based on all share classes.
Market Cap
In terms of market cap, Tesla stock vs. BYD stock is still lopsided.
Tesla is worth $359 billion, well off its peak valuation above $1 trillion. That’s still far above BYD’s $73.3 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 perhaps not for much longer. 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, » offering more incentives and growth can continue. 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 several more planned in the next few months. Its model lineup continues to expand dramatically.
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 are 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.
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