BYD’s sales eclipse Tesla’s for first time as EV giants go head-to-head

Hong Kong – BYD notched up another win over Tesla, reporting quarterly revenue beating that of Mr Elon Musk’s carmaker for the first time since the pair went head-to-head in global electric vehicle (EV) sales.

Revenue for China’s best-selling carmaker soared 24 per cent to 201.1 billion yuan (S$37.3 billion) for the three months ended September, falling short of estimates but exceeding Tesla’s US$25.2 billion (S$33.3 billion) in sales for the same period.

Net income increased 11.5 per cent to a record 11.6 billion yuan, beating estimates, as BYD sold an unprecedented 1.12 million electric and plug-in hybrid vehicles and generated a gross margin of 21.9 per cent. Its profit, however, is still overshadowed by the US$2.2 billion Tesla earned.

In the first nine months, BYD had net income of 25.2 billion yuan on revenue of 502.3 billion yuan.

BYD and Tesla have emerged as leading threats to legacy carmakers, particularly as Volkswagen, Ford Motor, Stellantis and General Motors struggle along the path to profitability with their EV transitions. As growth in consumer demand for fully electric cars wanes, BYD has been insulated more than Tesla due to its strong line-up of hybrid vehicles.

Hybrid vehicles were a major contributor to the revenue surge at BYD, with some models’ upgraded powertrains allowing for more than 2,000km of range.

Another key part of BYD’s edge is its vertically integrated supply chain – making more parts in-house gives it a cost and scale advantage to produce cars more cheaply.

Tesla, meanwhile, is dealing with a limited and increasingly stale EV-only line-up and has been more focused on ramping up production of its Cybertruck and expanding the use of its partial automation system marketed as Full Self-Driving.

Tesla’s artificial intelligence potential and its lead in fully electric vehicle 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.

BYD has also benefited from resurgent domestic demand in China, spurred by improved national and local government subsidies aimed at tempting consumers to trade in petrol cars for EVs and hybrids. Those local sales have helped cushion BYD against overseas resistance to Chinese carmakers’ expansion.

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 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 its leading sales position in China, the world’s biggest car market. The last three months of any year are usually the peak purchasing season and, on top of subsidies, central government agencies have been ordered to boost EV purchases.

BYD is also on track to meet its revised annual sales target of four million vehicles, having sold around 2.74 million vehicles through September. Citibank estimates BYD could sell as many as 500,000 units per month by November. BLOOMBERG