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Tesla Growing Fast, But This EV Rival Is Catching Up

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.




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Tesla stock and BYD stock were 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 308,600 electric vehicles in the fourth quarter, up from 241,300 in Q3, 201,250 in Q2 and 184,800 in Q1.

But BYD is catching up. BYD sold 93,945 new energy vehicles in December, up 218% vs. a year earlier. That was up from 91,129 NEVs in November, but snapped a six-month streak of EV/hybrid sales rising by roughly 10,000. China’s strict lockdown of Xi’an province affected some BYD production last month, though the company reportedly is close to normal operations again.

Of the 93,945 vehicles sold, 92,833 were personal vehicles, up 232% vs. a year earlier. EV sales reached 48,317, up 155%, while plug-in hybrid sales leapt 477% to 44,506.

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 nearly 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. They fell to 5,167 in December vs. 27,481 a year earlier.

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 had said the plants would begin producing Model Y crossovers before the end of 2021, but didn’t happen. Tesla has received a temporary permit for the Berlin site, but not a final one. When the Austin and Berlin factories come online, they’ll likely ramp up production slowly over time, along with ongoing Shanghai capacity increases.

That comes with Tesla passing a 1.2 million annualized run rate 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.

China’s intense Covid lockdown in Xi’an apparently affected some BYD production, at least temporarily.

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 the past year, 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 2022, 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 reportedly has pushed back Cybertruck production to early 2023 from late 2022. That suggests Tesla will go roughly three years before launching a new vehicle following the Model Y in spring 2020.

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.

Longer term, Tesla may expand into lower-cost models. Musk has said he would like to make a $25,000 EV. Such a model would run into dozens of existing rivals, mostly from Chinese EV makes such as BYD.

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 several months.

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.

The company also will assemble the next-generation of Nuro self-driving delivery vehicles, using many BYD parts, including Blade batteries. That’ll take place at BYD’s plant in Lancaster, Calif.


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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, with a lot of extra space at its Lancaster, Calif., site outside Los Angeles.

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. Lucid Motors CEO Peter Rawlinson is a former senior 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, which could be a growing business in 2022 and beyond. 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. There is widespread speculation that BYD will be actively involved in Toyota’s wider EV push, including but possibly not limited to batteries.

There has been repeated but unconfirmed speculation that Tesla Shanghai will use BYD batteries starting in 2022. 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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Beyond EVs

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, restricting or barring Tesla’s driver-assist systems. 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. It’s unclear when BYD might roll out driver-assist technologies and services.


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Tesla Stock Vs. BYD Fundamentals

Tesla earnings are expected to surge 184% to $6.36 a share for full-year 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.

Analysts expect solid profit growth for Q4 2021 and in 2022.

Tesla Stock Vs. BYD Stock Technicals

Tesla stock rallied 49.8% in 2021 vs. 28.7% for BYD stock, according to MarketSmith analysis. Tesla and BYD 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 powerfully above their 50-day line.

The EV giant blasted past out of a double-bottom base on Jan. 3 to kick off 2022, surging past a new handle buy point of 1,119.10 to just below all-time levels. But TSLA stock reversed hard as stocks with high price-to-earnings ratios came under heavy pressure. The stock closed down for the week.

The 1,119.10 buy point no longer seems relevant. Investors should probably use an entry just above 1200 — 1,202.05 or 1,208.10.

Tesla’s relative strength line is off highs, but not too much.

BYD stock also broke out in October to record highs, but tumbled back though its 50-day/10-week lines in December. Shares rebounded from their 200-day line last week.

BYD’s RS line 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 $1.05 trillion market cap. That’s far above BYD’s $93 billion.

BYD’s valuation is comfortably above that of Rivian stock ($72 billion) and ucid stock ($69.5 billion). It’s also slightly above the market cap of GM stock ($88.7 billion) but Ford stock has run up to $101 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.

In the coming years, BYD has many big markets to expand into, though 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.

Tesla stock and BYD stock were among the biggest EV winners in 2021, though Lucid stock and Ford had big years. TSLA stock is in a consolidation, but no longer in a buy zone. BYD stock is trying to bottom, but hasn’t made a serious rebound yet.

So, Tesla stock vs. BYD stock? Both are EV leaders with booming sales growth and strong prospects. Both stocks performed well in 2021.

TSLA stock is in better shape right now, while BYD stock is consolidating, but 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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