Energy
Tuesday, September 6th, 2022 2:40 pm EDT
BYD is the only automaker that sells more plugin vehicles worldwide than Tesla (and a bit fewer full electrics). It’s also basically the only other profitable electric automaker in the world. In some regards, you can certainly say that BYD is leading the charge in EVs. On the other hand, in terms of pure electrics, BYD trails Tesla a bit. The bigger difference, though, may well be what is happening in their bank accounts.
EV enthusiast “Ray4Tesla” dug into Tesla’s and BYD’s finances and noticed that Tesla rakes in a lot more money. Looking at revenue, Tesla took in $35.7 billion in the first half of 2022 compared to BYD’s $21.8 billion. The difference in terms of profit is even more notable. Tesla brought in $5.6 billion in profits, while BYD brought in $0.5 billion. On corporate terms, that’s a massive difference.
This is how the only two profitable EV makers in the world stack up against each other in the 1st half of 2022:
Tesla revenue: $35.69B & Net Profit: $5.58B
BYD revenue: $21.83B & Net Profit: $0.52B
BYD numbers may vary slightly due to fluctuating exchange rate.
— Ray4Tesla⚡️?☀️? (@ray4tesla) September 4, 2022
One thing I’ll note that may not be widely appreciated when looking at these numbers is that BYD is surfing that difficult-to-navigate wave of closing down its fairly large legacy fossil-fuel-vehicle business while investing more and more into EVs and expanding its model lineup and production. This has always been the big challenge of legacy automakers: how to phase out its traditional business and replace it with a competing business. BYD has primarily switched to plugin vehicles, or “new energy vehicles,” but it has still not fully completed this process.
Another key point that will be missed by no one is that Tesla sells higher priced “premium” products that offer a larger gross margin, while BYD often competes in more cutthroat affordable car categories — and in China, no less. So, one would expect BYD to have lower gross margins and lower net profit on comparable revenue. (And, in any case, Tesla’s revenue is considerably higher.)
Nonetheless, the difference is stark, and it sure puts this rivalry (if we can call it that) in a different light.
In this period, BYD sold 641,350 new energy vehicles including 323,519 BEVs while Tesla sold 564,743 vehicles.
— Ray4Tesla⚡️?☀️? (@ray4tesla) September 4, 2022
As Ray aptly points out, BYD is at much more risk of going into the negative rather than making profits if government policies regarding EVs changed or in the face of growing economic woes.
Making compelling EVs is hard. Making good profits without government subsidies is even harder. I hope Warren Buffet has realized that and put his proceeds from BYD sales to work at TSLA.
— Ray4Tesla⚡️?☀️? (@ray4tesla) September 5, 2022
We’ll see what happens in the future with these brands. I’m still bullish on BYD, its strategy, and its future. However, Tesla’s strategy and future seem even more stable and secure than BYD’s.
As has long been the case, BYD and Tesla are both leaders in the same industries, but in different ways.
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