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), BYD seized the crown in Q4 2023.
Tesla has struggled in the first quarter, with weakness in all its major regions. However, it will almost certainly regain its BEV crown, at least briefly, in the first quarter. That’s because BYD’s sales have plunged in Q1 amid typically weak China demand amid Lunar New Year holidays, and as consumers wait for price cuts and new models.
BYD has embarked on major China price cuts across much of its lineup, in recent weeks, even as it upgrades technology and launches he $233,500 U9 supercar. Tesla too has cut prices and offered other incentives in China, as well as in other markets.
BYD stock has fallen sharply in recent months amid price war concerns, while Tesla is among the worst performers in the S&P 500 this year. Both are trying to rebound.
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 delivered 484,507 EVs in Q4, beating analyst views of 480,463, according to consensus compiled by Tesla. Full-year deliveries hit 1.81 million, just topping the company’s 1.8 million target. Credit strong China sales.
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Meanwhile, BYD on Jan. 1 announced record December sales of 341,043 EVs, including plug-in hybrids. Q4 sales hit 942,779, with full-year sales of 3,012,906, topping BYD’s target of three million.
Notably it sold 526,409 all-electric BEVs in Q4, up from 431,603 in Q3. That topped Tesla for the first time, and with a clear margin.
In January, BYD sold 201,493 EVs, up 33% vs. a year earlier but down 41% vs. a year earlier. Most China EV makers reported sharp drops vs. December.
In February, BYD sold just 122,311 EVs, including just 54,908 BEVs.
Tesla doesn’t disclose regional or monthly sales figures, but vehicle registrations in Europe and China suggest sluggish demand. In the U.S., Model Y inventory is plentiful while Model 3 production very low. All that points to sales well below Q4’s levels.
BYD Price Cuts
BYD has slashed prices by more than 10% across its low-end and mainstream offerings. It’s leveraging its advantages from lower lithium prices and being a low-cost, vertically integrated automaker, producing its own batteries, motors and many other key components, including many of its chips.
At the same time, BYD is adding more smart tech to its vehicles, with driver-assist systems offered on its flagship Han and other mainstream offerings.
BYD is explicitly targeting traditional gas-burning vehicles, with its “electric cheaper than gas” slogan. Traditional automakers are cutting prices to keep pace, but so are China EV makers, many of which are not profitable.
There are indications that BYD orders have boomed on the price cuts, suggesting a big rebound in sales over the next few months.
Tesla Price Cuts
After slashing prices during 2023, Tesla has kept cutting prices in 2024. In January, it cut Model 3 and Model Y prices in China modestly, after some token increases in the fall of 2023. On March 1, Tesla announced big incentives for entry-variant Model 3 and Y vehicles, including insurance subsidies, cheap loan rates and more.
In Europe, Tesla cut Model Y prices noticeably in several countries, amid waning sales and reduced subsidies. On Feb. 12, it raised Model Y prices in some key European markets, though mostly still below where they were before the January cuts.
Inventory discounts on the new Model 3 are starting to ramp up in Europe as supply picks up.
In February, Tesla raised the U.S. price of its refreshed Model 3 Long Range by $1,000, but that largely reflected limited supply from the Fremont factory. Tesla briefly trimmed U.S. Model Y price for February only, but brand-new inventory is still discounted by far more.
Tesla Subsidies In 2024
In the U.S., the first two Model 3 variants lost their $7,500 IRA credits as of Jan. 1 due to tighter battery sourcing rules. Tesla could adopt different batteries over time, but would likely be more expensive.
Germany abruptly ended EV subsidies of 4,5000 euros as of Dec. 17. France ended subsidies for EVs made outside of Europe as of Dec. 15. That hits the China-made Model 3, but not the Berlin-made Model Y.
California, a massive market for Tesla, has limited its EV subsidy to the middle class and poor.
On the plus side, Americans buying Tesla vehicles still eligible for IRA credits in 2024 get that credit at the point of sale, vs. via a tax return months later.
In the U.S. and Europe, consumers can often buy a Model Y for less than a Model 3.
Tesla Model 3 Revamp
“Highland” Model 3 deliveries began in China and Europe in October. The modest refresh hasn’t spurred a big demand boost. The updated Model 3 is now available in the U.S. market, with only RWD and LR variants for now.
Meanwhile, various reports said that the Model Y won’t get a “Project Juniper” refresh in 2024.
Tesla Cybertruck
Tesla began deliveries in November. Two variants, the AWD Cybertruck and Cyberbeast, start at $79,900 and $99,990, respectively. For the next several months, Tesla is selling “Foundation” versions of the AWD and Cyberbeast variants, but for an extra $20,000.
Some early owners have complained that the Cybertruck’s battery range is far less than advertised. Worse, there are complaints that the stainless steel Cybertruck is already developing rust, corrosion and blemishes.
A base-model Cybertruck will start at $60,900, with a claimed 250-mile range, but won’t be available until 2025.
When the Cybertruck was first unveiled in 2019, Tesla said it would start at $39,900 with a top-variant range of 500 miles.
On the Q3 earnings call, Musk said that Tesla dug its own “grave” with the difficult-to-produce design. He added that it won’t be financially positive for Tesla in the first year.
The Cybertruck is 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 for several more years.
In late 2022, Tesla handed over a few dozen Semi trucks to PepsiCo (PEP), but still hasn’t declared any Semi deliveries yet, or revealed prices and actual specs.
Other Vehicles
Tesla has teased a next-generation EV, but hasn’t even shown images. It plans to build an EV plant in northeastern Mexico that will make that vehicle, but hasn’t broken ground yet. On the Q3 earnings call, Musk suggested he wouldn’t go “full-bore” on the Mexico plant until the interest-rate and economic climate is more favorable. There are reports that official ground breaking could finally start in March.
On the Q4 earnings call, Musk said he hoped to build the next-gen EV in the second half of 2025, though he admitted he’s often “optimistic” about timelines. He reiterated that the small EV will first be made at the Austin plant.
The Austin plant would have higher labor costs, a key factor in typically low-margin small cars.
Musk says Tesla will strip out costs in the new platform and use “revolutionary” manufacturing technique. However, Musk has tried to leapfrog industry factory productivity before without success. Lengthy delays, or worse, could result.
A selling point for a made-in-Mexico cheap EV is that it could take advantage of low labor costs, limited U.S. competition and the $7,500 IRA tax credit. Obtaining IRA-compliant batteries would be crucial for the model’s success in America.
Tesla Production
Tesla 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.
Tesla’s European sales weakened as 2023 wore on, a problem that may continue with the loss of key subsidies there. That may mean even fewer Tesla Shanghai exports to Europe.
Tesla suspend production at its Berlin plant from Jan. 29-Feb. 11. It cited parts shortages due to Red Sea shipping delays, but there’s no doubt that Tesla has excess inventory and capacity in Europe.
BYD Expansion
BYD is ramping up EV and battery production, with more China plants coming on line. It’s already building an EV factory in Thailand, set to begin production in mid-2024. BYD has announced it will build an EV plant in Brazil, Hungary and now Indonesia.
The company has signaled it could announce plans for a Mexico
plant later this year. Such a plant reportedly would not target the U.S. market, with BYD wary of U.S-China tensions.
BYD has said it has no plans to enter the U.S. market for personal vehicles, though it does build EV buses in Lancaster, California.
While BYD is making noise with price cuts, it’s also expanding its premium lineup.
BYD’s super-premium brand Yangwang began U8 deliveries in late 2023.
BYD officially launched its high-performance Yangwang U9 supercar on Feb. 25. with a price tag around $233,500 .
BYD’s FangChengBao brand has also started deliveries of the Bao 5, with more models to come this year.
The Yangwang, as well as the premium FangChengBao and Denza lines, offer significantly higher margins and will a place to showcase cutting-edge tech first.
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BYD is expanding massively overseas. Thailand has become a big market, but it has entered most of Asia. It’s the No. 1 EV seller in Israel and has entered Europe. BYD is making a big push throughout Latin America, especially Brazil.
Exports are still a small share of sales, but have skyrocketed from almost nothing in mid-2022. Notably, BYD is generally selling EVs overseas at higher prices than at home, boosting margins even after shipping and other related costs.
BYD’s first PCTC ship provides a new boost for overseas sales, with several more to come.
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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 at the 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 production has picked up output in recent months, but is still relatively low.
Also, more than three years after the much-hyped Battery Day, Tesla hasn’t solved key technical hurdles to allow for 4680 mass production and cost savings. It’s also not clear if some of the battery benefits are coming to fruition.
Tesla recently reduced the estimated range substantially on key Model Y variants, as well as the Model S and X, following new EPA testing rules. The new estimates are more in line with real-world experiences with Tesla drivers. The Justice Department has been investigating whether Tesla exaggerates battery range.
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 uses BYD battery packs for a Model Y variant at its Berlin plant.
BYD, like CATL and some others, is working on sodium-ion batteries. Those could be useful in smaller EV vehicles as well as for energy storage.
There is buzz that BYD will unveil an updated Blade battery in 2024, as well as an upgraded hybrid system.
Both Tesla and BYD are expanding in battery storage for home and business applications or utility-scale projects, though Tesla gets its batteries from CATL. BYD also teamed up with South Korea’s LG for storage in North America and Europe.
Tesla’s 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 deals with Ford, GM, Rivian and others to give those automakers’ EV customers access to Superchargers in the U.S. 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., which encouraged people to buy Tesla EVs
Tesla also has a solar installation business, but it’s been struggling.
Tesla’s self-driving ambitions continue. Autopilot and Full Self-Driving help bolster Tesla’s image of cutting-edge technology, while 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.
Tesla recently “recalled” Autopilot via an over-the-air software update to improve driver monitoring. That came as part of an ongoing NHTSA probe into Autopilot crashes.
Meanwhile, Reuters said a review of documents showed that Tesla knew of faulty suspension and steering parts across its model lineup going back at least seven years, but often blamed drivers when those parts failed.
BYD Other Businesses
BYD, notably, makes its own chips. That, along with the in-house batteries and other vertical integrations, helped BYD expand rapidly when 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, especially in premium models.
Rolling out quality Level 2 systems will be a priority for BYD’s brands in the coming year, as that’s increasingly becoming standard in mainstream and entry-level premium vehicles in China.
BYD detailed its autonomous driving efforts at a Jan. 16 event, disclosing massive R&D spending and staffing. It’s rolling some Level 2 systems, starting with premium models, but with mainstream models set to get them over the next year.
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 businesses such as smartphone components and assembly.
In late December, BYD Electronics closed its $2.2 billion deal for the mobility business of Jabil (JBL). That will boost the unit’s exposure to Apple (AAPL).
Tesla Earnings
Tesla earnings plunged 40% to 71 cents a share while revenue grew just 3.5% to $25.2 billion. Both slightly missed views.
Ongoing price cuts have propped up vehicle demand, but at the cost of margins.
Tesla gross margin fell to 17.6% from 17.9% in Q3 and 23.8% in Q4 2022.
Auto gross margins ex regulatory credits rose, slightly beating forecasts.
Operating margins rose 8.2%, breaking a long slide to 7.6% in Q3. It was 16% in Q4 2022. That’s in the normal range for traditional automakers.
Those margins improved with some cost reductions, but Tesla’s CFO said those savings have largely run their course. That suggests that ongoing price cuts will continue the downward pressure on Tesla’s once-mighty margins.
Tesla gave little indication of deliveries, other than to say 2024 growth would be “notably lower” than in 2023.
Analysts, who have been slashing Tesla estimates since the end of 2022, now see 2024 EPS down 1% vs. 2023’s $3.12. With Q1 deliveries tracking low, those estimates may continue to fall.
BYD Earnings
BYD earnings have been booming, but faced some headwinds in Q4 amid significant discounting.
On Jan. 29, BYD reported preliminary 2023 net income of RMB 29 billion ($4 billion) to RMB 31 billion. That’s up 74.5%-86.5% vs. 2022 but below estimates for some RMB 31.5 billion.
The preliminary full-year results imply Q4 net profit of RMB 7.6 billion yuan to RMB 9.6 billion, up 4%-31% vs. a year earlier but down from RMB 10.4 billion in Q3.
BYD will likely release full Q4 and 2023 figures inlate March.
BYD’s Q3 gross margin was 22.1%, the highest since Q3 2020, with BYD Auto’s gross margin surging to 25.7%. But Q4 preliminary figures suggest that margins took a big hit.
Recent big price cuts and and discounts will be offset to a large extent due to lower battery costs and other savings, but will likely continue to pressure margins in 2024.
Tesla Stock Technicals
Tesla stock is down 18.45% so far in 2024 as of March 1, rebounding somewhat from a 10-month low in early February according to MarketSmith analysis. Shares surged 102% in 2023/
However, TSLA tumbled back below the 21-day line on March 4.
Shares plunged followed the weak Q4 earnings and 2024 growth outlook in late January. But TSLA stock had already been weak to start the year amid price cuts and Hertz (HTZ) announced it was slashing its EV fleet, mostly made up of Tesla vehicles, citing weak demand and high repair costs.
The relative strength line recent hit its lowest levels in a year.
BYD Stock Technicals
BYD stock is down 9.4% in 2024 through March 1, rebounding from a 52-week low at the end of January. Shares climbed 12.7% in 2023.
BYD reclaimed its 50-day and 10-week lines for the first time in months, but fell back below those levels on May 4.
The EV giant hit a 52-week high of 36.27 on July 31, but has trended lower since then amid concerns that the China EV price war will hit sales and profits.
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, starting in late August. The latest was disclosed on Oct. 31. 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 $645.4 billion as March 1, well off its peak above $1 trillion. That’s still far above BYD’s $68.4 billion.
With Tesla margins now more like a traditional automaker, and with growth constrained for the near future, Tesla stock has a high valuation for its EV-led operating businesses. Much of Tesla’s valuation is clearly based on hopes that Musk will achieve breakthroughs in self-driving, robotics and AI.
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 sells far more EVs than Tesla and now has grabbed the “BEV” title. 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 far below $25,000.
With Tesla no longer “production constrained,” it’s shifted to price cuts to support demand.
BYD has expanded in several big markets, and that is key to its efforts to be a global auto giant. Its model lineup continues to expand dramatically, with big moves upscale.
Tesla has begun Cybertruck deliveries, but significant shipments won’t occur for several months. Musk has said the vehicle will be a financial drain in 2024. A next-generation vehicle may not arrive until 2026 or later, and making money on small EVs is difficult
Tesla stock doubled in 2023 but has been trending lower in recent months, with sharp losses to start 2024.
BYD stock, meanwhile, has plunged on China EV price war concerns.
Both EV giants are delivering far more electric vehicles than rivals. Tesla profits tumbled in 2023. BYD earnings growth remains strong, though it cooled late last year.
So keep your eyes on BYD and Tesla, as well as Tesla stock vs. BYD stock.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
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