BYD notched up another win over Tesla on Wednesday (Oct 30), reporting quarterly revenue that beat Elon Musk’s carmaker for the first time since the pair have gone head-to-head in global electric vehicle (EV) sales.
Revenue for China’s best-selling carmaker soared 24 per cent on year to 201.1 billion yuan (S$37.4 billion) for the three months ending Sep 30, falling short of estimates, but exceeding Tesla whose sales hit US$25.2 billion in the same period.
Net profit increased 11.5 per cent to 11.6 billion yuan, surpassing consensus, after BYD sold an unprecedented 1.12 million electric and plug-in hybrid vehicles last quarter.
Its profit however is still overshadowed by the US$2.2 billion that Tesla earned.
BYD and Tesla have emerged as breakout threats to legacy carmakers, particularly as Volkswagen, Ford Motor, Stellantis and General Motors struggle along the path to profitability with their EV transitions.
As consumer demand for electric cars wanes, BYD has been insulated more than Tesla considering its strong lineup of hybrid vehicles.
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Hybrid vehicles are a major contributor to the revenue surge at Shenzhen-based BYD, with some models’ upgraded powertrains allowing for a range of more than 2,000 km.
Another key part of BYD’s edge is its vertically integrated supply chain, and making more parts in-house gives it a cost and scale advantage to produce cars cheaper.
Meanwhile, Tesla has been dealing with an increasingly limited and stale EV-only lineup, and has been more focused on ramping up production of its Cybertruck and expanding the use of its partial-automation system.
Still, Tesla’s artificial-intelligence potential and its longer lead in EV sales has helped cement its place as the world’s most valuable carmaker.
BYD comes in third, behind Toyota Motor, but ahead of Volkswagen, Mercedes, and Detroit’s three carmaking giants.
The Chinese carmaker has also benefited from resurgent domestic demand in China that has been spurred by an improved package of national and local government subsidies aimed at tempting consumers to trade-in gas cars for EVs and hybrids. Those local sales have helped to cushion BYD against overseas resistance.
The European Union this week imposed higher tariffs peaking at 45 per cent on EVs from China, ratcheting up trade tensions between the world’s leading export powers. BYD also does not sell passenger cars in the US because of tariffs.
Earnings prospects for BYD in the final quarter look even stronger as it benefits from that leading sales position in China, the world’s biggest car market. The last three months of any year are usually considered peak purchasing season. On top of subsidies, Chinese central government agencies are being ordered to boost EV purchases.
BYD is also on track to meet its revised annual sales target of four million vehicles, based on its current run rate. It has sold around 2.7 million vehicles through September. Citibank estimates BYD could sell as many as 500,000 units a month by November.
Its Hong Kong-listed shares closed down 0.7 per cent on Wednesday, trimming year-to-date gains to 37.6 per cent. Tesla’s stock is up 4.4 per cent since January. BLOOMBERG
