Transportation Innovation

[gfp927z]

>>> Tesla Stock Vs. BYD Stock: Booming China EV Giant Takes Aim At Tesla


Investor's Business Daily

ED CARSON

08/07/2022


https://www.investors.com/news/tesla-stock-vs-byd-stock-comparing-ev-stocks-tsla-byddf/?src=A00220


Tesla (TSLA) and BYD Co. (BYDDF) are both fast-growing EV giants. While a lot of attention falls on startups such as Rivian Automotive (RIVN), Lucid (LCID), Nio (NIO), Xpeng (XPEV) and Li Auto (LI), as well as traditional automakers pushing into EVs, such as General Motors (GM) and Ford Motor (F), Tesla and BYD are setting the pace.

BYD reported yet another month of blowout sales of 162,350 vehicles, more than tripling vs. a year earlier. The China giant recently reported skyrocketing first-half preliminary profit.

Tesla reported better-than-expected earnings July 20. Shareholders OK'd a 3-for-stock split on Aug. 4.

While they are the two largest EV makers, Tesla and BYD haven't competed much head-to-head. But the BYD Seal is taking on the Tesla Model 3. The Seal officially went on sale on July 29, with deliveries starting this month.

The EV giant is poised to begin a massive international expansion, launching throughout Asia, Europe and more.

Both stocks are rebounding, though both fell below key levels on Aug. 5. Which is a better bet? Let's take a look at Tesla vs. BYD — and Tesla stock vs. BYD stock.

Tesla Vs. BYD Sales

Tesla reported Q2 deliveries at 254,695, slightly below views for about 256,000. That was down nearly 18% vs. Q1's record 310,048 but up 26.5% vs. Q2 2021.

Tesla produced 258,580 vehicles in Q2 vs. 305,407 in Q1. Tesla said June was a record month for production.

Blame Shanghai lockdowns for the declines. Tesla Shanghai was shut down for most of April, then was on limited production until early June.

In Q2, BYD sold 355,021 NEVs, surging 256% from a year earlier and jumping 24% vs. Q1's 286,329. Less than 3,000 were exported, though overseas sales are expected to climb.

So BYD didn't just overtake Tesla, it raced past the U.S. giant by just over 100,000 vehicles, seizing the EV crown. Of course, Tesla still leads in all-electric vehicles, but BYD's passenger EV sales did swell to 180,296 in Q2, significantly narrowing the gap.

Even as Tesla output rebounds, BYD is likely to maintain its overall sales lead in Q3 and beyond, given its slew of new models, factories and markets.

On Aug. 3, BYD reported record July sales of 162,350 electric vehicles and plug-in hybrids, up 222% vs. a year earlier and 21% from June's 134,036. BYD's sales include 162,214 passenger vehicles. Of those, BYD sold 80,991 passenger EVs and 81,223 plug-in hybrids.

Tesla Vs. BYD Expansion

Tesla recently began Model Y deliveries from its plants near Berlin, Germany, and Austin, Texas. But production has been unusually low to start.

Ongoing capacity increases to the Tesla Shanghai facility, also will boost production going forward. The Model Y production upgrades have reportedly ended with the Model 3 line now paused for improvements. In the short run, this likely limited Tesla Shanghai's production. The China Passenger Car Association estimated that Tesla China's wholesale sales, including exports, fell to just 30,000 in July.

Analysts had expected Tesla to deliver 1.5 million EVs in 2022, though Shanghai's Covid shutdown and lengthy limited production may curb that.

At Tesla's annual shareholder meeting on Aug. 4, Musk expects production to surge in the second half of 2022, reaching a 2 million vehicle run rate by year-end.

Despite big expansion plans, Tesla is slashing hundreds if not thousands of jobs. Elon Musk, fearing a recession, had warned in early June that he wanted to cut 10% of jobs. He later clarified that he meant salaried positions, though some hourly production workers also have been affected.

BYD also is adding significant EV capacity, along with several new or expanded battery plants.

That includes a new commercial vehicle and parts project, after diverting some production capacity to ramp up plug-in hybrid output.

In the first half of the year, BYD sold 641,350 NEVs, already beating 2021's full-year total of 593,745. The auto giant plans to sell at least 1.5 million new energy vehicles in 2022, or up to 2 million if supply issues ease.

Tesla, targeting the luxury and affordable luxury markets, has far higher selling prices than BYD.

BYD's average selling prices are much lower, with the majority of its EVs and hybrids selling for $15,000-$34,000, though some vehicles top $40,000.

The China EV giant does plan to move upscale significantly. It will unveil a high-end brand in the third quarter and show off its first model before year-end. The brand will target the luxury market of 800,000 ($119,520) to 1.5 million yuan vehicles, a BYD exec said in May, who added that the first model will be an off-road SUV. A second model could be large sedan.

BYD's Danza unit, 10% owned by Mercedes-Benz, will begin deliveries in August of a minivan in EV and PHEV variants. It starts at just under $50,000, with some variants going up to $69,000. A Danza SUV will be unveiled later this year.

BYD Vs. Tesla: Tesla Electric Vehicles

Tesla produces four electric vehicles: the luxury Model S sedan and Model X SUV as well as the Model 3 sedan and Model Y crossover. The vast majority are the Model 3 and Model Y.

Tesla has long touted the Roadster, Semi and Cybertruck as future vehicles. But those have been pushed back multiple times. Musk said on the Q2 earnings call that the Cybertruck is on track for mid-2023. But Cybertruck prices and specs — which were ambitious even compared to other Tesla vehicles — will likely be different than the initial claims back in 2019, Musk said a few weeks later.

That suggests Tesla will go three years — or more — before launching a new vehicle since the Model Y in spring 2020. Also, the Cybertruck likely will largely serve the U.S. market. So Tesla may not have a new vehicle for most of the world until 2024 or later.

Musk recently said Tesla is not working on a $25,000 vehicle, a goal he had touted for years. Even now, such a model would run into dozens of existing rivals, mostly from Chinese EV makers such as BYD.

BYD Vs. Tesla: BYD EVs Big And Small

BYD has a slew of models, some with electric and hybrid versions. The automaker is rolling out several new EV-only and hybrid-only models in the next several months, along with notable revamps or longer ranges for key models.

The Seal sedan, officially launched on July 29, is BYD's first clear head-to-head competition vs. Tesla. The BYD Seal is a Model 3 rival, with roughly equal range and faster acceleration — and $10,000 cheaper. The Seal starts at 212,800 RMB ($31,130) vs. 279,900 RMB ($41,950) for a base made-in-China Model 3.

Deliveries start in August.

BYD said Seal preorders had topped 60,000 since they opened on May 20. Other reports said Seal preorders had topped more than 110,000 by late June.

A successful Seal launch would not only further boost rapid sales growth, but could burnish BYD's brand as it expands into new markets.

On the low end, a BYD Seagull hatchback will soon launch with a price tag around $12,000.

In a few months, BYD will unveil the Seal Lion, an all-electric SUV that could take on the Tesla Model Y with a much-cheaper price.

The Denza D9 minivan will begin deliveries in August.

BYD also is one of the biggest makers of electric buses, with plants in the U.S. and many other countries besides China. BYD also makes EV delivery trucks, big rigs, garbage trucks and more.

BYD makes buses, big rigs and other heavy vehicles for the U.S. market at its Lancaster, Calif., plant. Also at Lancaster, BYD will assemble the next generation of Nuro self-driving delivery vehicles, using Blade batteries.

Tesla Stock Vs. BYD Stock: EV Markets

Tesla is a truly global EV giant, with major sales in North America, Europe and China. It has notable business in Korea and some other Asian markets. It has four plants, starting with Fremont, Calif., and Shanghai, joined by the Austin, Texas, and Berlin-area plants. Tesla already exports to Europe, mostly from the Shanghai plant.

As the Berlin plant ramps up over time, the Shanghai plant will export far fewer Model Ys to Europe, though Model 3 shipments will likely continue.

Elon Musk, in a May 31 interview released in late June, said the Berlin and Austin factories are losing billions of dollars due to low production.

While Tesla capacity is set to soar, it has no major new markets to enter or any new vehicles in the near future.

However, there's new progress on a big tax-and-spending bill in Congress that would extend U.S. EV tax credits, a boon for Tesla, which is no longer eligible under the current program. However, there are some income and vehicle price caps that could significantly impact Tesla vehicles' eligibility. A requirement for a high and rising share of battery materials from the U.S. or countries with U.S. free-trade deals also could complicate matters.

BYD's auto plants are in China, with virtually all its sales there. BYD easily tops Tesla in local China sales, even just in EVs.

That means BYD has a lot of markets to expand into.

BYD in the coming weeks will begin deliveries of the Yuan Plus, branded in most overseas markets as the Atto 3, in Singapore, New Zealand, Australia and more.

The EV giant has announced plans to enter Japan with the Atto 3 in early 2023, the Dolphin/Atto 2 mid-year and Seal/Atto 4 in late 2023.

BYD will announce its entry into Thailand as well on Aug. 8. Several of these markets are right-hand-drive countries, like the U.K.

BYD also reportedly is eyeing a move into South Korea, which would mean taking on Hyundai and its Ioniq EVs.

BYD signaled a significant European expansion as well, announcing on Aug. 1 that it will begin deliveries in Sweden and Germany in Q4. BYD began selling the Tang SUV in Norway, in late 2021.

The first BYD vehicles will reach Israel this quarter.

It is shipping various EVs and hybrids to much of Latin America, with plans to be in 45 Brazilian markets by year-end.

America isn't officially in BYD's sights in terms of personal EVs. Tariffs on China-made autos make exports to the U.S. cost prohibitive. BYD does make some EV buses here, with a lot of extra space at its Lancaster, Calif., site outside Los Angeles.

EV 'Freak-Out' Moment Looms Over Lithium, Rare Earths

Tesla Vs. BYD Batteries

Tesla doesn't mass produce battery cells. The Sparks, Nevada, gigafactory is a joint venture with Panasonic, which makes the cells. In China and increasingly in the U.S., Tesla buys off-the-shelf batteries from CATL.

It's increasingly shifting to lithium iron phosphate batteries. LFPs have some cost advantages, which have grown because they don't require any cobalt or nickel, unlike lithium-ion batteries.

Tesla has long led in getting more out of its batteries, though the high-end Lucid Air has higher battery efficiency than Tesla.

Tesla is developing its own 4680 battery cells in a pilot program. The 4680 batteries don't involve new chemistry. The larger form factor offers the potential for cost savings, but on the Q2 earnings call Musk said several technical challenges remain.

That could affect the timetable for the Cybertruck as well as other vehicles such as the Semi and Roadster.

BYD batteries, by contrast, are truly in house. The BYD Blade batteries, a specialized LFP battery, are seen as among the safest available for EVs.

BYD will supply batteries to Tesla, a senior BYD executive recently told state-owned TV, though that interview was later deleted. So far Tesla has not confirmed any deal, which has been rumored for months. A Tesla deal would be a major validation for BYD as a battery supplier to third-party automakers.

The made-in-China Ford Mustang Mach-E uses BYD batteries. GM will use BYD batteries in a made-in-China Cadillac. Toyota (TM) is expected to use BYD Blade batteries in an upcoming small EV for the Chinese market. BYD may be actively involved in Toyota's wider EV push in the coming years.

BYD and Tesla are on the forefront of automakers trying to lock up supplies of lithium and other key battery raw materials. Musk has discussed Tesla getting involved in lithium mining, but hasn't done so.

BYD is involved in lithium mining projects already. It's reportedly struck a deal to buy six lithium mines in Africa, according to local media. That could provide enough lithium to satisfy its battery needs for a decade.

Tesla Beyond EVs

Tesla and BYD are more than just EV makers.

Tesla has solar and battery storage businesses, but both are just a small part of total revenue.

Tesla also generates revenue via its Supercharger network. It's starting to open its Supercharger network to non-Tesla vehicles in parts of Europe, where third-party charging stations are common. In the U.S., the Supercharger network is still a big moat for Tesla, but the automaker may open up some stations to attract new subsidies.

Tesla's self-driving efforts have been a key revenue driver and brand builder. If Tesla is able to create a cheap, vision-only system that is fully autonomous everywhere and anywhere, the payoff will be enormous. But for now, even FSD Beta is a Level 2 driver-assist system.

AI chief Andrej Karpathy, who oversaw Autopilot, left the EV giant on July 13. Karpathy had been on a months-long sabbatical, raising speculation that he was on his way out.

The National Highway Traffic Safety Administration has expanded an Autopilot probe multiple times. The investigation began in 2021 with a look at Autopilot-related crashes into stationary emergency vehicles. The NHTSA is also looking into "phantom braking," when Tesla vehicles suddenly brake while on Autopilot.

The California DMV accused the EV giant of misleading customers about Autopilot and FSD, the Los Angeles Times reported late on Aug. 5. But if the state DMV wins its action, it'll likely only require Tesla to modify its advertising and marketing.

Musk has said Tesla is putting a lot of effort on developing the Tesla Bot, or Optimus. On June 2, Musk tweeted that "we may have an Optimus prototype working" by the next Tesla AI Day on Sept. 30. Most experts say general purpose humanoid robots are decades away.

BYD Semiconductor, Solar And More

In addition to making its own batteries, BYD makes its own chips, which has helped it rapidly expand over the past year while the industry had to idle production. In late January, the automaker won approval to list its BYD Semiconductor spinoff on the Shenzhen ChiNext market.

The company also has solar and energy storage businesses.

BYD has several partnerships related to autonomous driving. BYD has said it will adopt Nvidia's Drive system for autonomous driving. The follows a self-driving partnership with Baidu (BIDU), a leader in autonomous-driving technology. Nvidia (NVDA) and Baidu have long been autonomous-driving partners.

But BYD also says it will use chips from local Horizon Robotics in some 2023 models. That follows a driver-assist joint venture with Momenta, a Chinese autonomous-driving startup. BYD also has taken a stake in Lidar supplier RoboSense.

BYD is starting work on its own in-house chip for smart driving, local media reported in mid-July.

Tesla Stock Vs. BYD Fundamentals

Tesla earnings more than tripled to $6.78 a share in 2021, vs. $2.24 a share in 2020 and just 3 cents in 2019.

Tesla earnings rose 57% in Q2 while revenue grew 42%, both topping views. That came despite significant challenges, notably the lengthy Shanghai production shutdown and slow return. Earnings and revenue fell vs. Q1.

BYD earnings declined in 2021. Capital spending last year exceeded capex from 2018-20 combined, with huge outlays for new auto, battery and chip plants. EV and PHEV production capacity has surged in recent months and continues to increase. That is spurring massive revenue and profit gains this year and beyond.

On July 14, BYD said it expects first-half net profit up 139%-207% vs. a year earlier in local currency terms to 2.8 billion-3.6 billion yuan ($533 million). Excluding non-recurring gains and losses, profit likely skyrocketed 578%-795%.

Analysts see profitability and margins improving further in the second half, as BYD expands production and moves upscale.

Tesla Stock Vs. BYD Stock Technicals

Tesla stock is down 12.4% so far this year as of Aug. 4, according to MarketSmith analysis, but a big improvement from just a few weeks ago. BYD stock is up 12.1%, trying to hold recent levels.

Since the end of 2019, Tesla is up a massive 945%. BYD has surged 657%.

Tesla has a price-to-earnings ratio of 91, still high but down in the past year due to strong earnings and a declining share price. BYD's P-E is well into the triple digits. High P-E stocks generally have struggled as interest rates have risen over the last several months.

TSLA stock hit a record 1,243.49 in November. Shares approached those levels in April, but then sold off hard. On May 24, shares tumbled to an 11-month intraday low of 620.57, down just over 50% from its record high.

On July 21, TSLA surged following earnings, blasting above short-term levels after clearing the 50-day line a few days earlier. Shares continued to move higher, reclaiming their 200-day line.

On Aug. 4, Tesla investors OK'd a 3-for-1 stock split at the annual shareholder meeting, a long-expected move. The split will take place on Aug. 25.

Tesla stock tumbled on Friday, back below the 200-day line and down modestly for the week.

TSLA stock is far from a 1,208.10 buy point. Ideally, shares would consolidate, offering a handle or aggressive entry.

BYD stock hit a nine-month low on March 15, but rebounded back above its 50-day and 10-week lines in early April. Shares surged above its 200-day line in late May.

Shares broke out past a 39.81 buy point in late June. Shares fell back below the buy point on July 11, as China stocks sold off.

BYD dived July 12 on rumors that Warren Buffett would sell some of his longtime stake. Berkshire Hathaway (BRKB) bought 225 million H-shares in BYD in September 2008 and has held onto them. It's BYD's No. 4 shareholder, with a 7.73% stake. There's still no clarity on Buffett's BYD holdings.

BYD stock gapped up July 14 on the preliminary earnings. Shares are currently below a rising 50-day line.

Shares are on track to form a new base next to the deep consolidation, but needs another week. A move above the July 29 high of 39.35 would offer an aggressive entry.

Tesla Stock Market Cap

In terms of market cap, Tesla stock vs. BYD stock is no contest. Tesla is worth $903 billion and eyeing a return to a trillion-dollar valuation. That's leagues above BYD's $100.3tsl billion.

BYD's market cap exceeds that of Rivian stock and Lucid stock combined. It's also comfortably above the valuations of GM and Ford.

An S&P 500 giant, Tesla stock has an array of institutional sponsorship, 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 Warren Buffett's Berkshire Hathaway (BRKB) has been a notable investor for years. Cathie Wood's Ark Invest 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

In many ways BYD is what Tesla claims or aspires to be. BYD makes its own batteries and chips, as well as many other key parts. It's selling its batteries to other automakers, including Tesla itself soon. Musk has long touted a goal of a $25,000 Tesla. BYD already sells many EVs at or below $25,000, and at a profit. Musk has mulled getting involved in lithium mining. BYD already is.

BYD's EV and PHEV unit sales have passed Tesla's unit sales, with the automaker is accelerating production and just moving toward more-upscale offerings. For now, Tesla sells far more pure electrics than BYD, and at much-higher price points. Both are reporting booming earnings.

BYD has many big markets in which to expand, including several in the next few weeks and months.

Both EV giants are delivering far more vehicles than rivals, while growth prospects are strong.

Tesla stock and BYD stock were among the biggest EV winners in 2021. BYD is consolidating after hitting record highs in late June, with a possible aggressive entry. TSLA stock is still down for the year, but is rebounding back above some key levels.

So, Tesla stock vs. BYD stock? Investors should keep their eyes on them.

<<<



---