Here's Why BYD Stock Is A Better Electric-vehicle Bet Than Tesla - Barron's
Chinese EV maker BYD manufactures a lot more electric vehicles than Tesla if one considers hybrids. The company might soon overtake Tesla in the number of battery electric vehicles sold as well.
BYD manufactures battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), unlike Tesla, which makes solely BEVs, Barron's reported.
However, it is soon set to surpass Tesla's battery electric vehicle sales as well. In the third quarter, BYD shipped approximately 432,000 BEVs, just shy of Tesla's 435,000 units. Wall Street expects BYD to sell more BEVs than Tesla's estimated 475,000 in the fourth quarter.
BYD sold about 2.8 million passenger vehicles as of the end of Nov, marking a 70% rise from the corresponding period last year. BEV sales notched a growth of about 73% in the meantime.
The companies generated almost similar operating profit of about USD1.7 billion in the last quarter with an operating profit margin of under 8%. However, while BYD has a market cap of USD76.5 billion, Tesla has a market cap of a whopping USD809 billion.
The report pins this difference in market cap down to the place of origin of the two companies. While BYD is a Chinese company based in Shenzhen, Tesla is based in Austin and U.S. stocks generally earn higher valuations for investors due to differences in market liquidity, regulation and country-specific risks, the report noted, while adding that stocks in the Shanghai Composite trade for roughly 10 times estimated 2024 earnings while those in the S&P 500 trade for double that.
Furthermore, while Tesla is deemed to be at the forefront of new technologies with its energy storage venture and self-driving features, BYD lacks in-house autonomous driving tech, it added.
However, over 90% of analysts covering BYD rate the stock a "buy," the report said.
In fact, Future Fund Managing Partner Gary Black deems Tesla and BYD to be the sole 2 investable EV companies at present. "Tesla and BYD are the only two investible EV companies today," said Black.
"Both make money with very different strategies."
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bullrider_21OP : Both BYD and Tesla sell about the same number of NEVs a quarter. But BYD is set to sell 3 million NEVs this year and Tesla is set to sell 1.8 million. The companies generated almost similar operating profit of about USD1.7 billion in the last quarter.
So why should BYD trade at only 10% of Tesla's market cap? BYD is grossly undervalued and mispriced.
bullrider_21OP : BYD shares are set to outperform Tesla's next year.
103027647 : can list in Nasdaq ,vinfast got better valuations in Nasdaq