BYDDY - BYD: Biggest Share In The Largest Market

Summary

• During 2022, BYD sold about 900 thousand BEVs in China and I believe they will easily sell more than a million in 2023.
• The CPCA shows that BYD’s wholesale NEVs for 2022 went up over 210% year-over-year and they have a market share of nearly 29%.
• BYD, Tesla and Geely combine for nearly 45% of the NEV retail market share in China.

Introduction

We’re used to thinking of China as a global supplier of goods but they are also a substantial consumer of battery electric cars (“BEVs”). More than half of worldwide BEV purchases occur in China. When it comes to BEVs, the headlines often focus on US and European markets which are relatively small compared to China. My thesis is that BYD ( BYDDY ) has the biggest BEV share in the largest market and they show no signs of slowing down.

The Numbers

Looking closely at the BEV graph in a January 16th Wall Street Journal article , we see that China is expected to climb from about 5 million BEVs in 2022 up to almost 6.8 million BEVs for 2023. Meanwhile, Europe is expected to go from 1.55 million to 2.25 million and the US is projected to climb from 0.7 million to 1.1 million:

Said another way, China is expected to add 1.8 million BEVs to their annual sales in 2023! Meanwhile, Europe and the US should add 0.7 million and 0.4 million to their annual sales, respectively. The headlines for BEVs often focus on the smaller US and European markets but the real story is in China. BYD and Tesla (TSLA) are positioning for market share in China and everyone else is well behind.

The December 2022 China Passenger Car Association (“CPCA”) report shows the wholesale numbers for the top 15 companies in the month. All units are not the same! SAIC-GM-Wuling is near the top of the CPCA new energy vehicle (“NEV”) lists but most of their units are mini cars which have limited range and a price tag in the neighborhood of just $10,000:

Looking at BYD’s January 2nd HKEX announcement , we can tie to the 234,598 monthly passenger wholesale number above by seeing that they also had 599 commercial vehicles for a total of 235,197:

The CPCA shows that BYD’s wholesale NEV market share is nearly 29% and their units went up over 210% year-over-year:

BYD’s retail units are fairly close to their wholesale units whereas Tesla exports significant volume from their China factory such that the wholesale and retail units are different:

BYD’s retail NEV market share is nearly 32% and their units went up over 208% year-over-year. BYD, Tesla and Geely combine for nearly 45% of the NEV retail market share in China:

CnEVPost explains that exports are the difference between Tesla’s wholesale and retail numbers above. In other words, the 55,796 monthly wholesale units made in China minus the 13,870 monthly exports out of China are equal to the 41,926 monthly retail units delivered in China:

Tesla sold 55,796 China-made vehicles in December, including 13,870 vehicles for export, according to data released today by the China Passenger Car Association.

The Geely ( GELYF ) December 2022 press release shows that the 44,550 NEVs for December above were composed of 37,902 BEVs plus 6,648 PHEVs. I like the way that BEVs are increasing both as a percentage of NEVs and as a percentage of overall vehicles. The increase as a percentage of BEVs can be digested by the realization that 80% of Geely’s NEVs were BEVs [13,450 divided by 16,831] in December 2021 and this went up to 85% [37,902 divided by 44,550] for December 2022. As for BEVs increasing as a percentage of overall vehicles, we see that in the graph below:

Again, most of the SAIC-GM-Wuling units are mini cars such that the real story for BEVs in China centers around BYD, Tesla and Geely. Their 2022 yearly passenger retail NEV units were 1,799,947, 439,770 and 304,911, respectively.

Per CnEVPost , the exact count of BYD’s yearly passenger retail BEV units in nebulous:

The CPCA publishes BYD's retail sales figures in China each month, but only includes BYD's NEV sales, not the PHEV and BEV breakdown figures. Therefore, to be able to compare BYD's BEV sales to Tesla's sales in China, we use the company's exchange announcement for BYD's numbers.

Regardless of the exact number, nearly all of BYD’s 911,140 yearly passenger wholesale units were sold in China. Tesla’s 2022 China passenger retail BEVs are the same as their NEVs - 439,770. Including exports, 80% of Geely’s NEVs were BEVs for 2022. As such, I’m guessing Geely had nearly 244,000 passenger retail BEVs in 2022.

Summing up, we have the following BEV units sold in China during 2022:

BYD: over 900 thousand

Tesla: nearly 440 thousand

Geely: nearly 244 thousand

Valuation

Given BYD’s dominant BEV position in China, they are also in an excellent position for worldwide BEV sales. We see from a recent CnEVPost graph that when it comes to global sales, BYD and Tesla are well ahead of other public NEV car companies who make a large number of their vehicles in China. Geely would be higher here if this showed more than just their premium Zeekr brand but the point is that BYD and Tesla stand well above the rest with respect to global BEV sales:

My overall valuation thoughts haven’t changed much since my January 8th article . BYD could be worth up to $100 billion. 2 BYDDY ADRs represent 1 regular share and they had 2,911,142,855 combined shares in the 2022 interim report. As such, the market cap is about $86 billion based on the January 13th BYDDY ADR price of $59.10.

Forward-looking investors should keep tabs of unit deliveries and gross margins given the new developments with Tesla’s price cuts.

Disclaimer: Any material in this article should not be relied on as a formal investment recommendation. Never buy a stock without doing your own thorough research.

For further details see: