To The Moon

🌟🌟🌟$BYD COMPANY(01211)$  has outperformed $Tesla Motors(TSLA)$  in EV sales in Q4 23 with sales of 526,000 EVs versus Tesla's 484,500.  However Tesla still sold more if all 2023 figures are considered.   Tesla delivered 1.84 million battery only EVs while BYD sold 1.6 million units.   However BYD also produced 1.4 million hybrids.

BYD has transcended its origins as a battery manufacturer to become a formidable player in the Global EV market.   BYD is now China's largest EV maker.

Compared with Tesla, BYD's vehicles are more affordable.  This has helped BYD attract a wider range of buyers.  Its entry level model sells on China for just over USD 10,000.  The cheapest Tesla's vehicle, Model 3 costs almost USD 39,000.

However intensifying competition and a brutal price war since last year have affected the profit margins of many Chinese EV makers including BYD. 

BYD is the only major EV maker to produce battery cells from scratch and as such enjoys a major advantage over its rivals. 

Batteries can account for up to 40% of an EV's total cost and manufacturing them in house was much cheaper for  BYD.

In economic terms, BYD pursued a strategy of vertical integration or owning the different stages of the supply chain. 

BYD was so vertically integrated it owned shares in South American lithium mines that supplied its battery minerals. 

BYD had another advantage over Tesla.  With the Chinese government giving EV subsidies to its consumers, China has overtaken the US as the world's largest EV market in 2014.

By 2020 China accounted for half of global EV sales. 

BYD has continued to post its 2nd highest sales ever in May with plug in hybrid vehicle (PHEV) sales seeing strong growth. 

BYD sold 331,817 new Energy Vehicles in May compared to December's all time high of 341,043 units.  This is 38% up from 240,220 units in the same month last year and up 5.93% from 313,245 in April. 

BYD has unveiled its 5th generation Dual Mode technology on May 28, as well as its first 2 new models based on hybrid technology, the Qin L DM-i and the Seal 06 DM-i, to solidify its leadership in the NEV industry. 

In contrast Tesla cuts Model Y production in Shanghai by at least 20% in March to June.  Tesla has started sales of the updated Model 3 Performance in China with a starting price of RMB 335,900 (USD 46,380).  Local deliveries of updated Model 3 are expected to begin in 3Q 24.

Following Elon Musk's unannounced visit to China in May, Tesla is set to clear  a key hurdle to launching FSD by partnering with $Baidu(BIDU)$  on mapping and navigation feature. 

Sales of the FSD on China will provide a new revenue stream for Tesla, which saw sales in China drop 7.6% in the first 4 months of 2024 due to discounting from other  Chinese EV makers. 

Tesla ranked 3rd in China's new Energy Vehicle (NEV) market with 7.3% share with retail sales of 42,508 units while BYD is in 1st place with 38.1% retail sales according to China Passenger Car Association on June 9.

BYD has just opened its 1st showroom in Saudi Arabia recently.  BYD is expanding very quickly overseas.  It is currently in Europe, South East Asia, Australia and South America.  It also has factories in US, Brazil, Japan, Hungary and India. 

Performance wise BYD is up 5% in the past week and 4.8% year todate.  However it is down 6% in 2023. 

In contrast, Tesla is up 1.8% in the past 5 days but down 28% year todate.  In 2023, Tesla has dropped 14%.

However 1 area that BYD is not able to compete with Tesla is the US market.  The US government has recently imposed a 100% tariff on Chinese EVs in May 2024.  Fortunately the US is only 10% of the Global market.

Both BYD and Tesla have lots of upside potential.  However I believe that BYD has a slight edge over Tesla due to its dominant position in China, comprising of 60% of the Global EV market. 

Economists continue to forecast growth in EV sales, which is expected to rise by 9.5% in 2024 and 12.5% in 2025 with sales almost tripling by 2027.  So the current weakness in Tesla and BYD may also be temporary. 

I am torn between buying Tesla or BYD.  Tesla is more than just an EV company.  It operates its own network of charging stations while also selling solar roofs to residential consumers and battery storage products.  Tesla is also currently working on Tesla bots.  On August 8, Elon Musk will give further updates on Robotaxi.  He said he will look into introducing a cheaper EV codenamed Tesla 2 to compete with the lower priced Chinese EVs. 

I like BYD 's fast expansion globally and the market leader in China.  So if I can also choose 1, I would choose BYD as it has greater upside potential. 

Both Tesla and BYD are EV Titans but BYD is slightly ahead of Tesla in terms of sales, production and cost.   That is why I choose BYD over Tesla. 

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