Tesla (TSLA) and BYD (BYDDF) are the world’s largest electric-vehicle makers, becoming more direct competitors in China and much of the world.
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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). 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. That has continued in Q3
Tesla earnings rose in Q2, with ongoing price cuts and easy comparisons fueling big sales gains vs. a year earlier.
That followed booming preliminary growth from BYD, after both auto giants reported record Q2 vehicle sales. BYD reported record July sales on Aug. 1.
Tesla has just four models, with the bulk of its sales the Model Y crossover SUV. A revamped Model 3 could coming in the next few weeks, according to China social media buzz.
The Cybertruck is on the horizon, but plenty of questions remain. Musk has teased a next-generation model, but little more than that.
BYD has an ever-growing lineup, with EVs from $11,000 to $160,000. New and refreshed models are commonplace.
Meanwhile, BYD now supplies batteries to Tesla, making these two archrivals frenemies too.
Tesla stock has boomed this year after a terrible 2022. Shares sold off following Q2 earnings but are trying to battle back. BYD has done well in 2023, but has suffered serious losses. Blame the overall market pullback and overall weakness in China names.
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 In 2023
Tesla deliveries jumped to 466,140 in the second quarter, sprinting past Q1’s record 422,875 and Q4’s 405,278. That easily beat estimates of around 445,000, according to FactSet.
Model 3 and Y deliveries hit 446,915 in Q2, with the vast majority of that being the higher-priced Model Y. Model S and X deliveries picked up to 19,225.
Production hit 479,700, exceeding deliveries once again, even with Tesla curbing output below capacity. Tesla may need to keep cutting prices, especially if it wants to increase deliveries further.
BYD sold a record 262,161 EVs in July, up 61.3% vs. a year earlier and 3.6% vs. June’s 253,046. Of the 261,105 passenger vehicles, BYD sold 134,783 battery electric vehicles (BEVs) and 126,322 plug-in hybrids (PHEVs).
Overseas sales surged to a record 18,169 in July.
BYD will release August sales in early September.
In the second quarter, BYD sold 703,561 vehicles, up 98% vs. a year earlier and 27.4% vs Q1. That includes 352,163 BEV vehicles.
The automaker has a 2023 goal of selling at least three million vehicles.
While Tesla leads BYD in BEV sales globally, the latter is No. 1 in China. In fact, BYD is China’s largest automaker, period.
The Tesla-led EV price war took a toll on BYD, notably vehicles such as the Han and Seal. But sales are picking up, with new EVs andrefreshed models that often come with lower prices.
Tesla Price Cuts
Tesla slashed prices worldwide in January, with further cuts since then. The price cuts have made Model 3 and Y vehicles eligible for U.S. tax credits of $7,500.
China EV makers slashed prices in response to Tesla and a general production cut. BYD resisted at first but became more aggressive. BYD and rivals are rolling out a slew of new models, many of which will take on the Tesla Model Y.
Tesla has tweaked some prices higher over the past few months, but those have been easily offset by price cuts, substantial inventory discounts and other incentives, which have continued in the third quarter.
On Aug. 14, Tesla cut China prices of the Model Y Long Range and Performance variants by RMB14,000 ($1,930), supposedly only through Sept. 30. The Model Y is facing a number of new crossover rivals, including from BYD’s Denza. The base Model Y, the most popular variant in China, was left unchanged.
Meanwhile, Tesla is offering a fresh insurance subsidy of RMB 8,000 for Model 3 buyers. The EV giant may be trying to clear out inventory before an updated M3 is released.
Tesla Model 3 Revamp, Cybertruck
Tesla is poised to start production of a revamped Model 3 in China within a few weeks, with deliveries starting perhaps in September. A U.S. production launch of the “Highland” Model 3. It’s unclear what the changes will be. Leaked photos suggest some minor changes to the exterior.
The biggest change, reportedly, will be lowered production costs. That could let Tesla boost profit margins at the current price, or perhaps maintaining margins with further price cuts that would likely revive sales. But Tesla hasn’t even confirmed that the Model 3 is getting an overhaul, let alone any details.
Tesla China sales, including exports, tumbled to a 2023 low in July. That could reflect reduced current Model 3 output heading into the updated launch.
“Initial production” for the Cybertruck will come later this year, Tesla said on its Q2 earnings release. That came a few days after Tesla tweeted out a photo that many took to be a production-line Cybertruck, but apparently wasn’t.
It’s unclear when mass production will begin, while 4680 battery output issues could limit output. Tesla still hasn’t released Cybertruck prices and specs. Originally, Tesla said the Cybertruck would start at $39,900 with a $69,900 tri-motor version boasting a range above 500 miles. Musk has sent strong signals that the Cybertruck will be a lot more expensive.
It will be the EV maker’s first new passenger vehicle since the Model Y launched in early 2020. But 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 has teased a next-generation EV, but hasn’t even shown images yet. Tesla plans to build an EV plant in northeastern Mexico that will make the next-gen vehicle, though work hasn’t gotten underway yet at that site. 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. The next-generation model may not be out until at least 2025.
Tesla has handed over a few dozen Semi trucks to PepsiCo (PEP) starting late last year, but hasn’t 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 has increased at 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 well below capacity. On the Q2 earnings call, Elon Musk said Q3 production will likely come down slightly, which he says is for factory retooling. The Shanghai, Berlin and Austin output are well below capacity.
Tesla Shanghai no longer needs to export many Model Y vehicles to Europe. It’s begun shipping some made-in-China Model Y and 3 vehicles to Canada and some other markets. But that comes at the expense of Tesla’s U.S. plants.
Tesla has entered Thailand and will soon begin deliveries in Malaysia, 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 up EV and battery production, with more China plants coming on line in the second half of 2023. It’s already building an EV factory in Thailand, with that set to begin production in 2024. Vietnam said in May that BYD will make EVs in that country as well. In late June, BYD announced it would build a plant in Brazil. BYD also is expected to build or buy at least one plant in Europe. BYD has a tentative deal to set up some operations in Indonesia.
However, India has rejected BYD’s proposal for an EV and battery factory joint venture.
BYD has unveiled several new models. The small Seagull starts at around $10,700.
BYD’s upscale Denza brand has begun deliveries of the N7 crossover, its second model. The premium rival to the Model Y starts at $41,835 and goes to $52,645. The Denza N8 SUV was officially launched on Aug. 5, with deliveries coming soon.
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 has unveiled the “F Brand,” starting with an off-road vehicle. The Leopard 5 hybrid has been formally unveiled in August. The Fang Cheng Bao brand will price above Denza but below Yangwang.
Meanwhile, the BYD Song L is moving toward a launch by year-end. The crossover, which has generated buzz at auto shows, would a direct competitor to the Model Y, with faces a growing number of worthy rivals in China.
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 has started deliveries in Mexico, as part of a big push throughout Latin America.
BYD has led its export push primarily with the Atto 3 small SUV, but is adding the Dolphin in many markets with the Seal sedan and other models to follow.
Exports are still a small share of sales, but up sharply from almost nothing in mid-2022. That’s expected to ramp up further in late 2023, as BYD acquires its own RoRo transport vessels.
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.
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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, has pushed back output to late 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. Tesla plans a new facility in Shanghai to make Megapack large-scale battery storage units, presumably using CATL batteries.
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 is now using 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 eventually.
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.
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 struck recent deals with Ford, General Motors, Rivian and others to give those automakers’ EV customers access to Superchargers. They’ll also adopt Tesla’s charger standard soon. Those deals, and some related charging subsidies, will provide a nice boost to revenue. But they will reduce Tesla’s charging moat in the U.S.
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.
The NHTSA says it’s close to wrapping up its probe of Tesla’s driver-assist systems, which began two years ago starting with Autopilot crashes into stationary emergency vehicles.
It’s unclear what action, if any, regulators will take on Tesla Autopilot and FSD, as well as its driver-monitoring systems.
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 at least Level 2 driver-assistance systems in its Yangwang and Denza vehicles, as well as some BYD-brand EVs, over the next year. Level 2 systems, many with Lidar, are increasingly common in China.
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 rose 20% in the second quarter vs. a year earlier, while revenue swelled 47% to $24.9 billion vs. a year earlier. That follows Q1’s 21% EPS decline, with revenue up 24% to $23.3 billion, slightly missing.
Year-over-year comparisons were easy, with Tesla Shanghai shut down for several weeks in Q2 2022 due to Covid lockdowns.
Ongoing price cuts also fueled vehicle sales, but at the expense of margins.
Despite the easy comparisons, operating profit fell 2.6% vs. a year earlier.
Tesla’s gross margin fell to 18.2% from Q1’s 19.3%, tumbling 682 basis points vs. a year earlier. Tesla excludes R&D and some other costs from its gross margin calculations.
Auto gross margins excluding regulatory credits and leases dipped to 18.1% vs. Q1’s 18.3% and Q4’s 23.8%. Tesla had said 20% would be a “floor” for this metric in 2023.
Elon Musk didn’t sound concerned about falling profit margins, betting that full self-driving will generate huge profits.
“The short term variances in gross margins and profitability really are minor relative to the long term picture,” Musk told investors on the Q2 earnings call. “Autonomy will make all of these numbers look silly.”
Cheaper production costs for a Model 3 could help margins. However, the Model Y is now facing major competition from a variety of rivals in China. That could be a big blow to Tesla’s main EV.
Meanwhile, BYD earnings are booming.
On July 13, BYD said it expects first-half net income up 192%-225% vs. a year earlier in local currency. That implies Q2 profit up 129%-172%. Adjusted first-half profit was likely up 207%-240%.
BYD will likely report official first-half results in the next few days.
BYD already reported Q1 net profit surged 411% vs. a year earlier, while revenue jumped nearly 80%. Earnings and sales were down substantially vs. Q4 2022, in part due to 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 from 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 93.7% in 2023 as of Aug. 25.
On June 2, the EV giant cleared a 207.89 buy point, from a two-month cup base or a three-month double-bottom consolidation.
Shares hit a fresh 2023 high of 299.29, hours before the Q2 earnings report. TSLA stock plunged following earnings, and after trying to hold support have tumbled below their 50-day and 10-week lines. The EV giant has rebounded toward its falling 21-day line.
A move above the 50-day line might offer an early entry in a new consolidation.
BYD Stock Technicals
BYD stock slumped 27.7% in 2022. Shares are up 17.3% in 2023, but down sharply in recent weeks.
BYD hit an 11-month high of 36.27 on July 31, but then sold off hard for several weeks, tumbling through the 50-day and 200-day moving averages. Chinese stocks, including EV makers, have sold off on China economic concerns in August.
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 12 moves, starting in late August. The latest was disclosed on June 26. 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 $757.3 billion as of Aug. 25, off its peak valuation above $1 trillion but more than double above early January lows. That’s far above BYD’s $78.6 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 it’s targeting the “BEV” title 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 begin deliveries of its Cybertruck in late 2023, its first new passenger model in over three years, but with a lot of unknowns. Significant deliveries may not occur until well into 2024. A next-generation vehicle may not arrive until 2025 or later.
Tesla stock had a horrible 2022, while BYD stock fared badly too. Tesla has nearly doubled in 2023, even after a post-earnings retreat. BYD stock was having a strong year, but has sold off in August.
Both EV giants are delivering far more electric vehicles than rivals. Tesla profits are shakier in 2023. China’s BYD recently signaled Q2 profit nearly tripled, BYD earnings continue to surge vs. a year earlier.
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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