BYDDY - Why Are BYD Shares So Much Cheaper Than Tesla's?
2024-05-28 13:47:01 ET
Summary
- Tesla was overtaken by BYD for a short while last year as the biggest producer of EVs, and this could very well happen again on a more permanent basis.
- BYD is growing faster than Tesla and is introducing way more new models, but both are facing challenges with momentum.
- On pure financial performance, we see little reason for the huge valuation difference between the two companies, BYD is actually generating more cash as well as investing more.
- Tesla does have an advantage in FSD and its charging network and services are other advantages, but this isn't enough to explain the valuation difference, in our view.
- BYD generates much more cash flow despite investing more in R&D and CapEx.
If one had to point out the main rival of Tesla one would almost certainly end up with BYD ( BYDDF ) ( BYDDY ), the Chinese battery and EV producer who for a brief period produced even more EVs than Tesla, and could very well overtake them again soon.
We discussed BYD more fundamentally here in early April and came away very impressed (and we're not the only ones ) as they have managed to gain ground rapidly on its main international rival Tesla ( TSLA ), which we analyzed more fundamentally in two separate articles.
We think BYD has the upper hand currently as it's able to make much cheaper cars, which is where most of the demand actually is at the moment. As discussed in more detail, this is mainly due to producing their own batteries and having a well-integrated approach to assembly....
Why Are BYD Shares So Much Cheaper Than Tesla's?