Tesla Versus BYD - Which is a Better Buy?
🌟🌟🌟BYD $BYD COMPANY(01211)$
On March 24, BYD posted a 29% increase in revenue from the previous year, bolstered by sales of its hybrid vehicles.
According to Chairman and President of BYD, Wang Chuan Fu, the company has become an industry leader in every sector from batteries, electronics to new energy vehicles, breaking the dominance of foreign brands and reshaping the new landscape of the global market.
BYD has also announced a new battery technology called Super E-Platform that will allow cars that use the technology to achieve 400 kilometres of range within just 5 minutes of charging.
On April 8, BYD said that it expects to see record profits in the first quarter of 2025 due to booming sales in January to March which topped 1 million vehicles for the first time - a 39% increase in sales of pure electric vehicles to 416,388.
BYD expects net profits to hit between RMB 8.5 Billion to RMB 10 billion, up from RMB 4.6 billion in the same period last year. This would represent a year on year growth of between 86% to 119%. BYD also announced that it has also experienced substantial growth in international sales.
BYD shares are up 42% year to date and in 2024, BYD is up 77%. In contrast Tesla's shares is down 33% but still up 47% in 2024.
Tesla's latest delivery numbers in Q1 25 showed a decrease of 12.9% compared to the same period last year with 336,681 vehicles delivered worldwide. This marks the worst result in 3 years for Tesla.
The decrease in Tesla deliveries can be attributed to the impact of backlash against CEO Elon Musk for his role in DOGE, increasing competition and the ramp up of the updated Model Y production.
JPMorgan analysts have recently lowered its profit estimates for Tesla after the disappointing delivery numbers. They also said that Tesla has faced "unprecedented brand damage" after determining that Tesla's Q1 25 deliveries were far below even their low end estimate. JPMorgan Analysts reiterated their "underweight" rating at USD 120 as they "continue to see large downside" for Tesla.
Why is BYD performance better than Tesla?
BYD's success can be attributed to several strategic advantages:
Product Versatility - BYD offers a broad mix that caters to varied consumer needs from fully electric models to plug in hybrids.
Aggressive Pricing - Competitive price points have made BYD particularly attractive in China and Asia where cost is a critical factor.
Expansion into New Markets - BYD's rapid global rollout especially in emerging and price sensitive regions, is further fuelling its growth.
Tesla's Challenges :
Production Transition Issues - the transition to updated models like the new Model Y has resulted in production bottlenecks and short term declines in deliveries.
Operational Hurdles: Ongoing challenges which range from supply chain issues to operational disruptions, have contributed to a softer performance compared to previous quarters.
Brand and Market Dynamics: In regions such as Europe and Australia, Tesla's sales have been affected by both production delay and shifting consumer sentiments and have seen significant declines in local sales figures.
Tesla's current trailing P/E ratio is 123.6. This means that its share price is trading at 123.6 times the company's Earnings Per Share (EPS). The forward P/E ratio is 90.09, which considers future earnings estimates.
In contrast BYD's P/E ratio is 25.2 and the forward P/E ratio is 20.12. Compared to Tesla, BYD is undervalued.
Despite the short term headwinds, Tesla bulls remain firmly convinced of the company's long term potential. Their optimism centers on Tesla's groundbreaking technology and dominant position in the EV industry.
Many Tesla bulls highlight Tesla's leadership in Autonomous Driving, battery technology and its extensive Supercharger network. They believe that despite temporary setbacks, these core advantages will continue to drive Tesla's future growth. In the pipeline are Tesla's low cost model Model Q which is likely to hit the market in 2025. Then there is Cyvertruck with evolving iterations and Tesla Bot.
Tesla's Cybertruck is poised to disrupt the traditional pickup market with its unique design and competitive pricing. It is already generating media buzz and consumer interest, marking Tesla's foray into a new vehicle segment.
The Tesla Bot promises a revolution in Robotics and Labour Automation. However how and when it will launch is still unknown.
Dan Ives of Wedbush, a long time Tesla Bull recently revised his outlook on Tesla. He slashed his 12 month target price from USD 550 per share to USD 315 per share, a reduction of 43%. Despite the significant cut, Dan Ives maintained a Buy rating even though he cited concerns such as rising tariffs and brand crisis linked partly to CEO Elon Musk's recent high profile activities. This new price target reflects his apprehensions about Tesla 's near term challenges, even though he still believes in Tesla's long term potential.
In view of the above factors, I believe that BYD is a better buy compared to Tesla. However for those investors who believe in Tesla' s long term potential, the current price of USD 252.31 presents a great buying opportunity, considering its 52 week high was USD 488.54 achieved on December 18 2024.
Ultimately in deciding which is a Better Buy - Tesla or BYD, depends on each individual's risk appetite and personal preference.
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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