December 21, 2024

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Tesla Stock Vs. BYD Stock: Tesla Shanghai Suspends Production As Covid Wave Hits BYD

Tesla Stock Vs. BYD Stock: Tesla Shanghai Suspends Production As Covid Wave Hits BYD

Tesla (TSLA) and BYD Co. (BYDDF) are both fast-growing EV giants. 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). But Tesla and BYD are setting the pace.




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Tesla Shanghai suspended production as of Dec. 24 after curbing output back on Dec. 12 due to swelling inventories, even with big year-end discounts. Tesla also is offering various year-end incentives in Europe and the U.S.

BYD sales have been booming, but the China EV giant said Dec. 22 that Covid infections among factory workers is curbing its output.

Including plug-in hybrids, BYD has surged past Tesla sales. It’s closing the gap on BEVs, with sales soaring yet again in November. BYD continues to open new plants, with plans for its first factories outside China, including Thailand, Brazil and, soon, Europe.

Tesla stock has plunged in recent weeks on signs of weak demand as well as concerns about Elon Musk’s tweets on Tesla’s brand.

BYD stock is off bear-market lows, bouncing as China eased Covid rules. But it’s retreating now on resulting coronavirus wave.

Let’s take a look at Tesla vs. BYD — and Tesla stock vs. BYD stock.

Tesla Vs. BYD Sales

Tesla reported Q3 deliveries of 343,830 cars, up 42{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} vs. a year earlier and above Q1’s record 310,048. But that was below analysts’ estimates of above 360,000. Tesla produced 365,923 vehicles in the latest quarter, more than 22,000 above deliveries.

Tesla delivered 325,158 Model 3 and Model Y vehicles in Q3, along with 18,672 Model S and Model X luxury EVs.

BYD sold 230,427 all-electric and plug-in hybrid vehicles in November, up 153{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} vs. a year earlier and 5.8{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} vs. October. That includes 229,942 personal vehicles and 485 commercial units. Of those personal vehicles, some 113,915 were fully electric, or battery electric vehicles (BEVs), up 147{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} vs. November 2021. Plug-in hybrids shot up 164{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} to 116,027.

Over the past three months, BYD has sold 649,502 BEVs and PHEVs, including 312,013 BEVs.

BYD’s 90{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}-owned Denza unit reported sales for the first time, with 350 Denza D9 minivans sold in October and 3,481 in November. The D9, which comes in BEV and PHEV formats, starts around $50,000. Mercedes-Benz owns 10{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of Denza.

Tesla Stock Vs. BYD Stock: Tesla Shanghai Suspends Production As Covid Wave Hits BYD

 

Tesla Expansion, Demand

Tesla opened its plants near Berlin, Germany, and Austin, Texas in March and April, respectively. Model Y production has ramped up slowly at those sites, but is improving.

Recent upgrades to the Tesla Shanghai facility significantly boosted production capacity. But Tesla China demand is struggling to keep up with increased output.

Tesla sold a record 100,291 China-made EVs in November. That includes exports.

Tesla cut actual Model 3 and Model Y prices in China on Oct. 24 by as much as 9{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}.

Tesla is now offering a 6,000 yuan ($860) discount on inventory cars in China, on top of an existing 4,000 yuan insurance subsidy. Along with other incentives, Tesla China is offering over 21,000 yuan in incentives, with even more in Shanghai and Shenzhen.

All that’s before government subsidies of 11,088 yuan. Those government subsidies expire Dec. 31. So buyers will be paying more for many Tesla vehicles, and other EVs, in 2023. However, Tesla China sales are still weakening in December, according to China vehicle registration data.

Tesla Shanghai reportedly slowed production on Dec. 12 and halted output on Dec. 24, amid rising inventories. Workers are set to return on Jan. 1. Tesla had denied reports that it would slower or suspend Shanghai output.

Tesla exported more Shanghai vehicles in Q4 to ease local demand concerns. But that, along with increased Tesla Berlin production, is reducing European backlogs.

Germany will reduce EV subsidies as of Jan. 1. Norway is ending subsidies. Sweden has just ended subsidies with U.K. subsidies winding down soon.

Even with some pull-forward demand due to the expiring subsidies, Tesla is now offering 10,000 free Supercharging kilometers in Europe for taking delivery before year-end. It’s also offering some Model Y discounts in the U.K.

All of that suggests weaker European demand in 2023.

Over in the U.S., many Tesla vehicles will be eligible for new U.S., tax credits of up to $7,500 as of Jan. 1, subject to a variety of conditions.

That’s spurring many would-be buyers to delay purchases or delivery until Jan. 1. In December, Tesla offered $3,750 off and 10,000 free Supercharger miles for people taking U.S. delivery of a Model 3 or Model Y before year-end. On Dec. 21, Tesla upped that discount to $7,500.

Meanwhile, Tesla reportedly will soon announce plans to build its next EV plant in northeastern Mexico. That would offer a relatively low-cost site while still being close to the U.S. market. It’s unclear which vehicles might be produced at the plant, which presumably would not be operational until 2024 at the earliest.

BYD Expansion

BYD also is adding significant EV and battery capacity.

The auto giant’s NEV deliveries should more than triple to 1.88 million in 2022, a BYD exec said Dec. 22. That’s slightly below its prior hopes for 1.9 million, due to a recent Covid outbreak among factory workers. That’s curbing daily production by at least 2,000 vehicles.

There’s concern that Covid waves, which will likely continue beyond the Lunar New Year in late January, will hinder production, supply chains and demand in China broadly.

BYD Chairman Wang Chuanfu has set a 2023 delivery goal of 4 million.

Tesla, targeting the luxury and affordable luxury markets, has far higher selling prices than BYD. The majority of BYD’s EVs and hybrids sell for $15,000-$34,000, though a growing number top $40,000.

The China EV giant also plans to move upscale significantly. The Denza unit moves BYD into the affordable luxury space. A Denza SUV should join the D9 minivan in early 2023.

BYD said it would raise China prices as of Jan. 1, citing battery material costs, even though that’s when government subsidies end.

BYD also plans to launch two more brands in 2023.

The first, called Yangwang, which means “looking up,” will target the luxury market for 800,000 yuan ($110,300) or more, starting with an off-road SUV.

BYD also will launch a personalized brand next year, with few details given.


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BYD Vs. Tesla: Tesla Electric Vehicles

Tesla mass 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, with the Model S and X largely limited to North America for now.

On Dec. 1, the first Tesla Semi deliveries took place, with PepsiCo (PEP) the first customer. The Tesla Semi was first unveiled in 2017. But the Tesla Semi will not use 4680 batteries, raising questions about costs. It’s also unclear if the Semi will be produced in volume or in token amounts.

The Roadster and Cybertruck also have been pushed back multiple times. Musk says the Cybertruck is on track for “early” production mid-2023, with a Reuters report saying mass production will start at the end of 2023.

Put prices and specs will likely be different from the initial Cybertruck claims back in 2019, Musk says.

The Cybertruck likely will largely serve the U.S. market. So Tesla may not have a new passenger EV for most of the world until 2024 or later.

Tesla may be updating its Model 3 sedan at some point in 2023, with the goal of lowering production costs and improving its appeal. The “Highland” redesign reportedly will include some changes to the interior and exterior, as well as possible change to the powertrain.

Model 3 sales have flattened out, in part due to people opting for the Model Y crossover but also due to competition from the BYD Seal, Nio ET5 and many more.

Musk also recently stated that Tesla is working on a much-cheaper EV, signaling a possible return to a long-touted goal of a $25,000 vehicle. However, he gave no timeline. 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.

The Seal sedan is BYD’s first clear head-to-head competition vs. Tesla. The BYD Seal has roughly equal dimensions and range to a Model 3 — and is far cheaper. The Seal starts at 212,800 RMB ($29,617) vs. 265,900 RMB ($37,007) for a made-in-China Model 3, even after Tesla’s price cuts.

BYD started Seal deliveries in late August, with deliveries reaching 11,267 in October. Production is set to keep ramping up and will reach many overseas markets in 2023.

BYD unveiled Frigate 07, a mid-size SUV that’s the second model in the Warship line of plug-in hybrids. The Destroyer PHEV sedan launched this spring.

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.


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Tesla Stock Vs. BYD Stock: EV Markets

Tesla is a global EV giant, with major sales in North America, Europe and China. It has notable business in Korea, Japan, Australia 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 Shanghai.

Tesla is launching in Thailand, but it’s unclear when deliveries will start.

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

While Tesla capacity is soaring, it has no major new markets to enter or new passenger EVs in the near future.

The U.S. recently approved new EV tax credits. Tesla, no longer eligible under the old program, should be a winner. Income and vehicle price caps will limit some Tesla vehicles’ and buyers’ eligibility. A requirement for a high and rising share of battery materials and components from North America also could complicate matters.

But, if nothing else, the new rules — which mandate assembly in North America — cut off tax credits to many Tesla rivals.

BYD’s auto plants are in China, with virtually all its sales there, but those are both changing.

The company has just opened a semi-knocked down assembly plant, in which partially assembled vehicles are imported and finished to get lower import tariffs.

BYD will build a manufacturing plant in Thailand. The export-focused plant should be running in 2024 with an annual production capacity of 150,000 vehicles.

BYD will build three plants in northeastern Brazil, including one for passenger vehicles. The plants will begin operation in 2024-2025.

A top BYD executive said recently that the company is planning on an EU factory, perhaps two.

Exports reached 12,318 in November, up from 9,529 in October and 4,026 in July. They should keep surging in the next several months.

BYD has started Atto 3 deliveries in New Zealand, Australia and Singapore. The Atto 3 is the Yuan Plus’ name for most overseas markets. Several other Asian countries will follow in the next few weeks and months, including Thailand, Malaysia, India and Japan.

BYD has started deliveries across much of Europe, expanding from just the Norway market. BYD set European pricing well above the sticker price for those vehicles in China, suggesting the automaker is looking to establish itself as a premium or near-premium brand on the Continent.

BYD in early October agreed to sell more than 100,000 EVs to German car rental giant SIXT over six years. That follows Tesla and GM EV deals with Hertz (HTZ). SIXT says it will order several thousand BYD EVs to start.

The EV giant will enter Japan with the Atto 3 in early 2023, the Dolphin/Atto 2 midyear and Seal/Atto 4 in late 2023.

BYD is increasing its sales in Latin America, ramping up in Brazil in particular. The automaker said in late November that it will enter Mexico in 2023. It’s also planning to enter Chile, a major lithium producer.

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.

BYD is mulling building a battery plant in the U.S., but not currently making EVs here.


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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 technical challenges remain.

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 also is working on sodium-ion batteries, which offer lower range but would be much cheaper. They could be  useful for small-range vehicles or for storage, where energy density is less of an issue.

BYD is now supplying Blade batteries to Tesla Berlin. It’s a major validation, as BYD aims to be a major battery supplier to third-party automakers.

The made-in-China Ford Mustang Mach-E uses BYD batteries.

Toyota (TM) will use BYD batteries and motors in an upcoming small EV for the Chinese market, the bZ3. 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. Tesla has proposed a lithium processing plant in Texas.

BYD is involved in several lithium mining projects already.


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Tesla Beyond EVs

Tesla and BYD are more than just EV makers.

Tesla has solar and battery storage businesses, but both are 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 at least some stations to attract new subsidies.

Tesla CEO Elon Musk tweeted on Thanksgiving that Full Self-Driving Beta is now available to any FSD owners in North America who request it.

That could allow Tesla to recognize more deferred revenue from FSD. Tesla’s self-driving efforts have been a key revenue driver and brand builder.

But Full Self-Driving is not full self-driving. Even FSD Beta is a Level 2 driver-assist system, while many U.S. and China rivals are rolling out Level 4 robotaxi services in select urban areas.

The Justice Department reportedly is conducting a criminal probe of Tesla’s self-driving claims. The SEC has a civil probe of Tesla’s claims. The California DMV in July accused the EV giant of misleading customers about Autopilot and FSD.

The National Highway Traffic Safety Administration has expanded an Autopilot probe multiple times, looking into crashes into stationary emergency vehicles, “phantom braking,” in-cabin cameras and even how Tesla assembles reports that claim to show Autopilot’s safety benefits.

Still, Tesla raised the price of FSD in North America to $15,000 from $12,000 in early September.

An Optimus robot prototype was unveiled at Tesla AI Day on Sept. 30, with limited mobility. Musk said Optimus should go on sale in 3-5 years for less than $20,000. Most experts say general purpose humanoid robots are decades away.

BYD Semiconductor, Solar And More

BYD makes its own chips, which has helped it rapidly expand over the past year while the industry had to idle production.

The company also has solar and energy storage businesses, as well as a variety of other operations.

BYD said in mid-December that it had deployed 6.5 gigawatts’ worth of battery storage so far in 2022. That’s likely at least equal to Tesla, which deployed 4.08 GWh of battery storage in Q1-Q3, with just over half of that in Q3.

BYD’s massive battery plant expansion is driving its own EV growth and third-party EV sales, but will help the storage business boom next year.

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), 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.


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Tesla Stock Vs. BYD Fundamentals

Tesla earnings more than tripled to $2.26 a share in 2021, vs. 75 cents in 2020 and just 1 cent in 2019.

Tesla earnings rose 69{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in Q3 while revenue grew 56{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, but the top-line gain fell short.

Tesla’s gross margin was 25.1{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, with an automotive margin of 27.9{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}, 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{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}.

With production set to surge in Q4, Tesla said it will make more vehicles than it deliveries for a second straight quarter. It says that’s intended to ease logistic challenges and costs.

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 and continues to increase. With sales skyrocketing, and BYD’s selling prices rising, that is spurring massive revenue and profit gains this year.

On Oct. 28, BYD reported third-quarter net income jumped 350{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} vs. a year earlier in local currency terms, with revenue up 116{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}. Adjusted earnings spiked 923{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}.

BYD’s gross margin was 18.96{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in Q3, up from 14.39{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in Q2 and 13.33{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} a year earlier. Automotive gross margin was 22.77{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} vs. 17.82{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} in Q2 and 17.31{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} vs. a year earlier.

With sales and ASPs continuing to ramp up in Q4, BYD profits and gross margins are likely to improve vs. Q3.


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Tesla Stock Vs. BYD Stock Technicals

Tesla stock is down 65{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} this year as of Dec. 23, according to MarketSmith analysis. BYD stock is off 28{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809}.

TSLA stock hit a record 414.46 in November 2021.

Musk’s chaotic reign of Twitter has raised concerns for Tesla investors. He’s driven away advertisers with his tweets and policies, with the latter often in flux Musk’s rising negatives could hurt the Tesla brand in the U.S. The high year-end U.S. discounts may reflect, in part, Tesla brand damage.

Tesla CEO Elon Musk says he’ll step down as Twitter’s chief when he finds a new CEO, following a user poll supporting the idea. It’s something many high-profile TSLA bulls have urged. The poll closed with a majority voting “yes.”

But shares have kept tumbling in heavy volume, amid ongoing concerns about Tesla demand. TSLA stock is at its worst levels since September 2020.

Late on Dec. 22, Musk pledged not to sell more Tesla stock until at least 2024. Musk has sold $39 billion in TSLA stock since the November 2021 peak, including $3.5 billion in the three days ended Dec. 14.

BYD hit record highs in June, but then tumbled. Berkshire has sold small slices of its H-shares in BYD in six moves, starting in late August. The latest was disclosed on Dec. 13.

Berkshire still owns around 7{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of BYD, based on all share classes.

BYD stock hit a fresh bear market low on Nov. 25. But shares bounced with other China EV makers on Covid easing hopes, retaking the long-sliding 50-day line. Shares retreated below the 50-day line on Dec. 23, with a long distance to the 200-day.

Tesla Stock Market Cap

In terms of market cap, Tesla stock vs. BYD stock is no contest. Tesla is worth $388.9 billion, but well off its peak valuation above $1 trillion. That’s still far above BYD’s $66.8 billion.

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 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

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. 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 raced past Tesla’s unit sales, with the automaker accelerating production and moving toward more-upscale offerings. For now, Tesla sells more far more pure electrics than BYD and at higher price points. But the BEV gap is rapidly narrowing, while BYD’s average prices are trending up. Both are reporting booming earnings.

BYD has expanded in several big markets, with several more in the next few months.

Both EV giants are delivering far more electrified vehicles than rivals.

Tesla stock and BYD stock were among the biggest EV winners in 2021. Both are down sharply in 2022, especially Tesla. Both EV giants need serious repair.

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

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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