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. Both have huge expansion plans. Tesla stock and BYD stock have been big winners in 2021, but which is a better bet now? Let’s take a look at Tesla vs. BYD — and Tesla stock vs. BYD stock.
Tesla Vs. BYD Sales
Tesla is the world’s largest electric vehicle maker, delivering 241,300 electric vehicles in the third quarter, up from 201,250 in Q2 and 184,800 in Q1. In early January, Tesla will release fourth-quarter deliveries, which will likely easily top 260,000.
But BYD is catching up fast. New energy vehicles have increased by roughly 10,000 per month for six straight months, hitting 91,219 in November, up 241% vs. a year earlier. Of that, 90,121 were personal vehicles, up 253%. That includes 46,137 EVs, up 153%, while plug-in hybrids shot up 500% to 43,984. It’s the sixth straight month that BYD has increased EV/PHEV sales by roughly 10,000. BYD could top 100,000 NEV vehicles in December, with that report due in early December.
Hybrid sales have skyrocketed thanks to a new, fuel-efficient DM-i system that provides substantial battery range.
BYD EV and hybrid sales combined are now roughly equal to Tesla’s all-electric deliveries. They are far above those of Nio, Li Auto and Xpeng, let alone U.S. EV startups Lucid and Rivian Automotive.
BYD is winding down its sales of traditional gas vehicles, down to just over 7,000 in November.
Both Tesla and BYD have managed to grow rapidly despite chip shortages that have crippled almost every other automaker in 2021, including GM and Ford but also Li Auto, Xpeng and Nio. BYD makes its own chips.
Tesla Vs. BYD Expansion
Both will continue expanding rapidly. Tesla will soon open plants near Austin, Texas and Berlin, Germany, and is looking to expand its Shanghai facility yet again. The Austin and Berlin plants will make the Model Y to start.
Tesla has said the plants would begin producing Model Y crossovers before year-end, but that hasn’t happened yet. CEO Elon Musk tweeted on Dec. 19 that he’ll hold a “grand opening party” for the Austin plant in early 2022. Tesla held a “grand opening” event at the Berlin site on Oct. 9. But the company as of mid-December still not yet submitted all the paperwork for a final permit to begin production at its Berlin plant.
But at some point soon the Austin and Berlin factories will come online and ramp up production over time. That comes with Tesla almost certainly passing a one million annualized run rate of sales in Q4 2021.
BYD also is adding significant EV capacity. The company recently said in an investor conference call that its 2022 NEV sales target is roughly 1.1-1.2 million units, with 600,000 EVs and 500,000-600,000 PHEVs. That’s up from 600,000 in 2021. But the forecast seems conservative, given that flat sales from November’s pace equal an annual run rate of 1.08 million NEV vehicles.
BYD says it’ll open three new factories, boosting capacity by another 500,000 vehicles by Q2 2022. All that suggests that BYD’s electric and hybrid production could hit 1.5 million or more.
Tesla, targeting the luxury and affordable luxury markets, has far-higher selling prices than BYD. Average selling prices have come down, as the vast majority of its vehicles are now Model 3 and Y vehicles vs. the Model S and X. Price cuts were common until 2021, but Tesla has raised prices several times in 2021, especially in the U.S. With overall industry production down sharply due to chip woes, Tesla and other automakers have extreme pricing power right now.
As overall auto production rebounds over the next year and EV production explodes, pricing power will likely ease somewhat.
BYD also has the benefit of lower-cost China production, but its ASPs are much lower, with the majority of its EVs and hybrids selling for selling between for $15,000-$34,000, though some vehicles top $40,000.
The China EV giant does have plans to move upscale, competing more directly with Tesla as well as Nio, Xpeng and Li Auto. It reportedly will unveil a high-end brand in the first half of next year, starting with a large crossover SUV.
BYD will increase its stake in its Danza joint venture with Daimler to 90% from 50%. Danza, which is not a big auto operation, could be another avenue for BYD to move upscale.
BYD Vs. Tesla Electric Vehicles
Tesla keeps it short and sweet, producing 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. Tesla’s latest target is for the Cybertruck to begin production in late 2022, with volume output not starting for several months after that. All three vehicles may require big improvements in batteries or battery technology to be viable. Tesla is struggling with technical issues for mass producing the 4680 battery.
BYD, by comparison, has a slew of models, some with electric and hybrid versions such as the flagship BYD Han sedan and fast-rising compact Dolphin. The automaker is rolling out several new models in the next year.
BYD reportedly will unveil a new premium brand in the first half of 2022, starting with a luxury SUV crossover.
BYD also is one of the biggest makers of electric buses, with plants in the U.S. and many other countries besides China. BYD has gotten a slew of bus orders recently in Europe, where diesel buses are being phased out. That can serve as a steppingstone for BYD’s personal EV ambitions on the Continent. BYD also makes EV delivery trucks, garbage trucks and more.
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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, as well as the Mideast. It has two plants, in Fremont, Calif., and Shanghai, China. Tesla will soon open plants in Austin, Texas, and near Berlin. Tesla already exports to Europe, mostly from the Shanghai plant.
As the Berlin plant ramps up, the Shanghai plant presumably will export far few Model Ys to Europe, though Model 3 shipments will likely continue.
While Tesla capacity is set to soar, it has no major new markets to enter or any new vehicles in the near future. Meanwhile, overall auto production should rebound in 2022, with EV output surging, especially in crossovers. That could pressure Tesla sales and especially pricing.
New U.S. EV credits would provide another Tesla demand boost at home. But there is a growing risk that Congress will not approve them, with the broader legislative package in doubt.
BYD’s auto plants are in China, with virtually all its sales there. BYD easily tops Tesla in local China sales for EVs alone.
The upside is that BYD has a lot of markets to expand into. It has just started to sell the Tang SUV in Norway, giving it a foothold for a much-larger expansion across Europe. It is shipping some EVs to Latin America. It also has big designs on Australia.
Its low-to-moderate-priced vehicles could serve rich and developing nations, while Tesla’s current and planned vehicles are clearly aimed at affluent customers in rich nations. But America isn’t in BYD’s sights for now. Tariffs on China-made autos make exports to the U.S. cost prohibitive. BYD does not have any public plans for a U.S. EV plant so far, though it does make some EV buses here.
Tesla Vs. BYD Batteries
Tesla, despite a common belief, doesn’t actually make battery cells. The Sparks, Nevada gigafactory is a joint venture with Panasonic. Panasonic makes the battery cells, Tesla packs them together. In China and increasingly in the U.S., Tesla buys off-the-shelf batteries from CATL and other Chinese battery giants. It’s increasingly shifting to lithium iron phosphate (LFP) batteries.
However, Tesla has long led in getting more out of its batteries, though it recently has been surpassed by Lucid Motors. The high-end Lucid Air has higher battery efficiency than Tesla. It’s not a coincidence that Lucid Motors CEO Peter Rawlinson is a former Tesla engineer.
BYD batteries, by contrast, are truly in house. The BYD Blade batteries have good range and are seen as among the safest available for EVs.
BYD sells its batteries to other automakers. The made-in-China Ford Mustang Mach-E, just starting deliveries, uses BYD batteries. There are reports that Toyota (TM) will use BYD Blade batteries in a small EV for the Chinese market, and widespread speculation that BYD will be actively involved in Toyota’s wider EV push.
There has been repeated but unconfirmed speculation that Tesla Shanghai will use BYD batteries next year. Tesla currently uses CATL batteries in its China-made models, but may be looking for additional batteries. Tesla has said it’ll use LFP batteries more frequently in the U.S. and Europe. BYD has a battery factory in the U.S.
There are also local media reports that Nio is in talks to work with BYD on the former’s upcoming sub-brand that will target the mass market. A deal would likely involve BYD Blade batteries.
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Tesla and BYD are more than just EV makers.
Tesla has solar and battery storage businesses. Both are growing rapidly but are just a small fraction 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. However, other charging stations are increasing rapidly, with the recently passed infrastructure bill providing funding for more.
One of Tesla’s most-important and most-controversial products relates to its self-driving efforts, notably Autopilot and Full Self-Driving. FSD has 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.
There are downsides. Regulators could step in, forcing major changes and testing. If Tesla is unable to move past Level 2, while rivals such as GM’s Cruise, Ford-related Argo, Google’s Waymo and many China operators roll out Level 4 robotaxi services in city after city, Tesla’s brand could take a hit. So could Tesla stock. Bullish analyst price targets for TSLA stock often assume huge self-driving revenue in the coming years along with massive EV market share.
In addition to making its own batteries, BYD makes its own chips. A BYD Semiconductor spinoff with a listing on the Shenzhen ChiNext is planned.
BYD also has an energy storage business.
BYD recently formed a driver-assist joint venture with Momenta, an autonomous driving startup in China. On Dec. 23, BYD signed a strategic deal with Lidar supplier RoboSense, taking a stake.
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Tesla Stock Vs. BYD Fundamentals
Tesla earnings are expected to surge 167% to $5.99 a share in 2021, up from $2.24 a share in 2020 and just 3 cents in 2019. Sales jumped 57% in Q3 vs. a year earlier to $13.76 billion.
BYD earnings have declined in the past two quarters, 63% and 22%, respectively. Sales growth has slowed from 148% in Q1 to 27% in Q2 and 24% in Q3.
How can revenue growth be slowing as EV sales skyrocket? BYD has been replacing gas-burning auto sales with EVs and plug-in hybrids. But ICE sales are now a small fraction of overall auto sales, so future EV and PHEV sales gains should contribute more clearly to overall top-line growth.
Tesla Stock Vs. BYD Stock Technicals
Through Dec. 23, Tesla stock has rallied 51.2% in 2021 vs. 30.7% for BYD stock, according to MarketSmith analysis. Tesla and BYD has made huge moves from their May lows.
TSLA stock hit a record high in early November after breaking out of a long consolidation in October. But shares have fallen in whipsaw fashion over the past several weeks, breaking below the 50-day line and round-tripping a 38% gain. But shares rebounded for big gain heading into Christmas, retaking its 50-day moving average.
The EV giant now has a consolidation that can be viewed as a double-bottom base with a 1,202.05 buy point. A downward-sloping trend line from the early November peak offers an early entry around 1,115.
The relative strength line has retreated over the past several week, but from record highs.
BYD stock also broke out in October to record highs, but has tumbled back though its 50-day/10-week lines. Shares rallied last week from near their 200-day line, but remain a long way from any buy point.
BYD’s RS line also has fallen back from highs.
Tesla Stock Market Cap
In terms of market cap, Tesla stock vs. BYD stock is no contest. Tesla has a $1.07 trillion market cap. That’s far above BYD’s $94 billion.
BYD’s valuation is above Rivian stock ($87.2 billion) and Lucid stock ($62 billion). It’s also modestly above GM stock ($82.6 billion) and Ford stock ($80.9 billion). BYD has a significantly higher market cap than Xpeng, Nio and Li Auto stock.
Now 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 the No. 1 holding across ARK Invest’s ETFs.
Tesla also is on IBD Leaderboard.
BYD stock has far-less big sponsorship, though Warren Buffett’s Berkshire Hathaway (BRKB) has been a notable investor for years. ARK Invest also owns a small stake. One issue is that BYD stock is listed in Hong Kong and trades over the counter in the U.S. That also means BYDDF stock shows a lot of minigaps, with most of the share price action reflecting Hong Kong trading.
The lack of a U.S. listing may turn out to be a positive, with Beijing and Washington both making moves that could spur Chinese stocks off U.S. exchanges. Xpeng stock, Nio and Li Auto sold off hard in early December, along with other U.S.-listed Chinese firms, on delisting fears.
Tesla Stock Vs. BYD Stock
While Tesla still sells more all-electric vehicles than BYD and has a much-larger market cap, in many ways BYD is what Tesla claims or aspires to be. BYD does make its own batteries and chips. Tesla CEO Elon Musk has long touted a goal of a $25,000 car. BYD already sells many EVs at or below $25,000, and at a profit. If and when Tesla moves down market with cheaper EVs, it’ll face a vast array of competing models, many from BYD.
In the here and now Tesla sells more far more pure electrics than BYD, and at much-higher price points. Tesla earnings are booming while BYD earnings have recently declined.
BYD has more markets to expand to in the coming years, but it’s unclear when it might try to tackle the U.S. EV market.
Both EV giants are delivering far more vehicles than rivals such as Xpeng and especially the likes of Lucid and Rivian.
Growth prospects are still strong for these EV leaders.
Technically, Tesla stock and BYD stock are among the biggest EV winners in 2021, though Lucid stock and Ford have had big years. Both TSLA stock and BYD are struggling, but are looking better than most EV plays.
So, Tesla stock vs. BYD stock? Both are among the EV leaders with booming sales growth and strong prospects. Both stocks have performed well in 2021, especially since May, but both are struggling right now, especially BYD.
Is it question of BYD stock vs. Tesla stock? Investors should keep their eyes on both.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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