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.
Tesla announced big price cuts worldwide in January, and has kept doing so. Many other China EV makers have also cut prices in turn, 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.
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. BYD unveiled several models at the Shanghai Auto Show, across a wide price scale.
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 tumbled back following deliveries. Shares have tumbled below key moving averages.
BYD stock is up solidly in an up-and-down year, recently clearing an aggressive entry.
Let’s take a look at BYD vs. Tesla, as well as BYDDF stock vs. TSLA stock.
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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 May 2 local time, 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).
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.
BYD has stepped up discounts in recent weeks.
Export sales rose to 14,827 vehicles in April, up from March’s 13,312.
BYD is not just the largest EV and NEV seller in China, it’s the country’s largest automaker, period.
Tesla Price Cuts
Tesla has slashed prices worldwide multiple times in 2023, starting in January and continuing into April. The only exception is China, where Tesla cut prices significantly in late October before the early January cuts.
U.S. price cuts have made most Model 3 and 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 reduced tax credits for the entry-level Model 3, which uses China-made LFP batteries, to $3,750.
The global price cuts sparked demand for Tesla Model 3 and Y vehicles, but the effect has quickly worn off, spurring further cuts.
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.
In late April, Tesla began offering some new modest discounts on some Model 3 and Y inventory vehicles in Europe.
In early May, Tesla slightly raised prices on Model 3 and Y vehicles in U.S., China and some markets. That could be an effort to prod wavering buyers to act rather than wait for further price cuts.
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.
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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.
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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 and its sister brands will be launching a large number of BEVs and PHEVs in the coming months.
At the Shanghai Auto Show on April 18, BYD formally launched the low-end Seagull, a small EV starting around $10,700. It also It unveiled the Song L, a small SUV that could challenge the Model Y, as well as the Destroyer 07, a mid-size plug-in sedan. BYD’s super-premium brand Yangwang said its U8 off-road vehicle will start at $160,000, with deliveries beginning in the third quarter.
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 supercar able to jump as well as operate with just three 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 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 Europe and 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.
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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.
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.
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 per share fell 21% in the first quarter vs. a year earlier. That was in line with analyst 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 auto gross margins excluding credits and leasing.
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.
Tesla excludes R&D costs and service center overhead from its gross margin calculations, unlike most automakers. Tesla’s gross margin just including R&D costs slid to 16% in Q1.
Tesla has said it expects to produce 1.8 million vehicles in 2023, up 37% from last year.
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 — and keeping production idle — that’s a different story.
The slew of new Tesla price cuts in April suggest further pressure on margins.
On the Tesla earnings call, Musk said that he’s going to stress higher production over margins, indicating further price cuts could be ahead. He said it’s Tesla will reap higher margins when Tesla 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 again after falling in 2021 amid massive investments.
On April 27, BYD reported Q1 net profit surged 411% vs. a year earlier, while revenue jumped nearly 80%. But actual earnings and sales were down substantially vs. Q4 2022. Some of that reflects a seasonally slow first quarter, with China New Year. Some of its reflects higher R&D spending. 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 30.4% in 2023, but down sharply over the past month.
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. A brief breakout on March 31 quickly failed following deliveries, with shares continuing to slide below the 50-day line.
Tesla plunged following the Q1 earnings report, Shares recently hit a three-month low, but are trying to find their footing. Technically, it no longer has a base, but if it starts to recover it would have a double-bottom consolidation with a 207.89 buy point. Within a few weeks, the 200-day line should be below that potential entry.
BYD Stock Technicals
BYD stock slumped 27.7% in 2022, but is up 20.1% 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 has a bottoming base with a 34.04 buy point.
On April 27, BYD stock rebounded past an early entry of 29.86. Shares have fallen back below that level but have found support at the 21-day line. BYD is close to forging a proper handle, with a new, official 31.17 buy point.
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 halved its stake.
Tesla Vs. BYD Market Cap
In terms of market cap, Tesla stock vs. BYD stock is still lopsided.
Tesla is worth $509 billion as of May 3, off its peak valuation above $1 trillion but well above early January lows. That’s far above BYD’s $80.5 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 skyrocketed in 2023, but has fallen back considerably. BYD is up solidly for the year and trading near buy points.
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.
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