BYD VS Tesla, who is the king of new energy vehicles?

"I don't think (BYD) cars are doing well, nor do they think their products are attractive and have little technical content. They have many problems in the Chinese market and should continue to focus on the operation of the Chinese market."
Musk commented on BYD in an interview in 2011.
However, Tesla, which has won the title of new energy vehicle sales for three years, is now being pulled down by BYD. In 2022, BYD surpassed Tesla (1.31 million vehicles) with the annual sales of 1.8 million vehicles, becoming the world's new energy vehicle sales champion; This is also BYD's first counterattack victory after being counterattacked by Tesla in 2019.
The speed of BYD's counter-attack made Steve Westly, a former member of Tesla's board of directors, bluntly say, "BYD has given Tesla a real challenger for the first time".
However, although BYD won the sales competition, it did not earn money from Tesla. The competition between the two is not only in terms of sales volume, but also in terms of profit margin.
With the exit of national subsidies and the recovery period of the industry after the epidemic, the competitive situation of new energy vehicles will only intensify and will not weaken. Is BYD, the "new sales champion", or Tesla, the "cost killer" better at the end of this new energy vehicle campaign?
Sales volume is the first priority of competition at this stage
According to the data, BYD's total sales volume in 2022 reached 1.869 million, including 911000 and 946000 pure electric and plug-in hybrid vehicles, and only 12000 fuel vehicles.
From the perspective of BYD's sales performance in 2022, BYD's Song family, Qin, Tang (parameter | inquiry) and Dolphin are the four main models driving sales growth, accounting for more than 60% of the total sales. In particular, BYD Song's new energy SUV sales in 2022 exceeded 470000, up 356% year on year, surpassing Tesla Model Y by more than 150000 vehicles.
On the other hand, Tesla's 1.31 million vehicles delivered last year came from pure electric vehicles. Only the Modle 3 and Modle Y models accounted for 94.9% of the total number of vehicles delivered, with 1.247 million vehicles delivered.
In the view of auto industry analyst Zhang Xiang, "the very high sales volume of single car is Tesla's advantage, but also Tesla's disadvantage".
It is not difficult to see from Tesla's product layout that it has been pursuing the "less but better" product line, and has not released a new car for three years. The main model Model 3 has entered the seventh year of mass production, and the Model Y has also been in mass production for three years since it was delivered in 2020.
As Tesla's "money making machine", Modle 3/Y has made great contributions, but also fell into the situation of weak growth. "In the early days, Tesla took a lot of lead in terms of endurance and charging, but this advantage has gradually been equalized." Zhang Xiang said to the Titanium Media App.
In addition, the price range of 200000 to 350000 focused by Model 3/Y is the market segment with the largest number of products, the largest sales volume and the most fierce competition of independent brands, including BYD, Xiaopeng, Aian and other auto companies have launched corresponding models.
With more user options and less advantage difference, Tesla's sales growth will inevitably be affected. According to the financial report data, Tesla's annual delivery in 2022 increased by 40% year-on-year, compared with 87.2% last year.
It is worth mentioning that, as the leader of Tesla, Musk is also a major variable affecting Tesla's sales and revenue. Last year, its acquisition of Twitter and frequent introduction of preferential policies and other measures have caused dissatisfaction among investors and consumers, and its share price has dropped by 65%.
As for the reasons for BYD's anti-overloading, an industry expert said, "The impact of the epidemic last year on the supply chain further magnified BYD's advantages. In the face of the situation of 'lack of core and expensive electricity', BYD has the ability to vertically integrate the supply chain, and the risk of being damaged is relatively small, while other auto companies are more likely to stop production due to the impact of the supply chain."
According to Titanium Media App, starting from the auto business, BYD's supply chain supporting subsidiaries have covered the upper and middle reaches, including BYD Semiconductor, BYD Electric, BYD Technology, BYD Battery, BYD Precision, BYD Power, BYD Vision/BYD Lighting, etc., covering the field of auto related intelligent parts.
In terms of the most scarce chips, almost all the new cars released by BYD last year used self-developed IGBT chips. Not only that, it also spent 1.59 billion yuan last September to acquire the Ziguang Chengdu memory manufacturing base to improve the chip R&D and production capacity.
Although Tesla has strong bargaining power in the supply chain, it relies more on the supply chain than BYD.
However, from the perspective of global layout, the market performance of Tesla products is obviously more robust. According to the latest financial report, Tesla achieved revenue of US $40.553 billion, US $18.145 billion and US $22.764 billion in the United States, China and other markets, accounting for 49.78%, 22.27% and 27.75% respectively.
By contrast, BYD's vehicle sales are mainly concentrated in the domestic market, and the international recognition still needs to be improved. According to the data, BYD's overseas sales of new energy passenger vehicles in 2022 totaled 55916, accounting for less than 3% of its total sales.
From the perspective of BYD's strategic layout, it is accelerating the process of going to sea in an all-round way, and plans to build the first overseas passenger car factory in Thailand; In January this year, media reports pointed out that BYD was interested in taking over Ford's factory in Germany; BYD spent 5 billion yuan to order 8 ro-ro ships, each of which can accommodate 7700 vehicles.
For the next year, market news pointed out that BYD set the sales target of 4 million units in 2023, which is equivalent to more than double the sales volume in 2022, far higher than the target output of 1.8 million units given by Tesla.
BYD up, Tesla down
Based on the current war situation, BYD's global sales have surpassed Tesla's, and according to the expected development trend, the results of the new energy vehicle sales competition are almost predictable.
Although BYD has won the sales competition, it is still difficult to compete with Tesla in the profit competition.
"In the auto industry, except for Chinese enterprises, no other company can grow as fast as (Tesla)." Steve Westly pointed out, but he also pointed out that Tesla's profitability and brand influence are hard to be replaced.
Even in the fourth quarter of the year when the company frequently introduced preferential policies and pursued "price for volume", Tesla's net profit was as high as $3.7 billion, the gross profit rate of cars reached 25.9%, and the single car profit was close to $9100 (about 61000 yuan).
In contrast, BYD's net profit attributable to shareholders of listed companies last year was 16 billion - 17 billion yuan. According to the rough calculation of the annual sales volume, the net profit per car was about 8888-9444 yuan, far lower than Tesla's.
In fact, Tesla's auto gross profit margin has always been at the leading level in the industry, even reaching 32.9% at one time. By contrast, the gross profit margin of Weixiaoli Automobile, a new force of automobile manufacturing, is only 12.0%, 11.6% and 16.4%.
Tesla's high gross profit rate is inseparable from its ability to control the cost of the whole link from production to sales. From the location of Tesla's factories, we can see that most of its super factories are located close to the supply chain to reduce transportation costs; In addition, Tesla has always advocated the integrated die-casting technology, which can reduce the number of parts in the manufacturing process and reduce the manufacturing cost by 40%.
At the sales end, Tesla also keeps costs to the extreme. "Tesla adopts a direct sales model, which can firmly hold the bargaining power in its own hands, while BYD will also share a considerable part of the profits to dealers," said Lin Shi, Secretary-General of Intelligent Connected Vehicles of China-Europe Association.
Although there is still a big gap between BYD's car gross profit margin and Tesla's, the single car profit of only 800 yuan in 2021 has increased nearly ten times.
"As a traditional automaker that is transforming from oil vehicles to hybrid strategy, BYD has a heavier burden of transformation than Tesla, a pure electric vehicle manufacturer, and the cost of medium transformation will be converted into the cost of single vehicle manufacturing." Chen Jia, a researcher at the International Monetary Research Institute of Renmin University of China and an independent international strategy researcher, also said. He also pointed out that BYD's layout in the fields of battery, engine and integrated parts offset some of its new energy transformation costs.
In terms of the battery that accounts for nearly 60% of the total vehicle cost, some media once calculated that the battery cost of the ternary material used by BYD's new energy passenger car in 2019 was about 0.85 yuan/Wh, while the replacement of the "blade" lithium iron phosphate battery could reduce to 0.6 yuan/Wh. If the capacity of a tram battery is calculated as 60kWh, then 15000 yuan can be saved for each vehicle only in battery.
Technological progress can promote cost reduction, but the reconstruction of brand image cannot be achieved overnight.
From the product positioning of BYD and Tesla, the price of its main models is about 100000 to 200000 yuan, and the average price of products is about 180000 yuan, while the average price of Tesla's low-cost models is about 300000 yuan.
It is worth mentioning that through the different product paths of BYD and Tesla, it is not difficult to see the differences of its user groups - the former attracts the user groups who pay more attention to practicality and cost-effectiveness, and the sales of its models focus on capturing the market share of Toyota, Honda, Volkswagen, GM and other traditional fuel vehicles; Tesla, which emphasizes technology and breaks the situation with high-end products, radiates consumers who focus on product technology elements and high-end brand image, and focuses more on BBA's market landscape.
For a long time, BYD brand has often been labeled as "cost-effective" or even "cheap", and its brand premium capability is far inferior to that of Tesla, which has broken the circle with high-end models.
In the face of this weakness, BYD is seeking higher profits by launching high-priced models. Among the models launched by BYD in 2022, its price range has reached 400000 yuan, for example, the price of BYD Seals has reached 2098-286800 yuan; BYD's sales price reached 2158-329800 yuan; The price of Tencent brand is about 400000 yuan.
In order to hit the high-end market, BYD also released the high-end car brand "Look Up" in January this year, and unveiled two million luxury cars, "New Energy Hard Off-road U8" and "Pure Electric Performance Super Run U9".
In contrast, Tesla's current strategic focus is still on low-price models, and it will quickly occupy the market in the mode of low-price, low-cost and high-margin.
It is reported that Tesla will launch the new model Q this year, with a market price of 25000 US dollars (about 168900 yuan). Although the official denied it, Musk has clearly stated that it is developing a lower cost model platform, and it is expected that the sales volume will exceed the sum of other Tesla vehicles.
In terms of product layout, BYD is up and Tesla is down, but different paths and directions are the same destination. In general, it means selling more cars and making more money.
The winner is uncertain before the end
In the view of BYD Chairman Wang Chuanfu, "the first half of new energy vehicles is electric, and the second half is intelligent."
From the perspective of development at this stage, Tesla has been at the forefront of the industry in the direction of intelligence. Musk has also said many times that automatic driving ability is the core competitiveness different from other auto companies. By October 2022, Tesla FSD's vehicle application scale has expanded to 160000.
By contrast, BYD is still in the catch-up stage of making up lessons. Wang Chuanfu recently said that the company actively explored the development of electrification and intelligence, and will also increase the R&D and innovation of imaging sensing, radar and other automatic driving technologies in the future.
It is worth mentioning that although the total mileage of Tesla FSD has reached 100 million miles (about 160 million kilometers), due to the lack of the ability to use China's scene data, Tesla has not been able to run smoothly through high-speed sections in China.
According to the judgment of the industry, the future automobile hardware will gradually converge, the automobile will also be defined by software, and the data will also become the main driving force.
The competition for intelligent new energy vehicles has just begun. It remains to be seen whether Tesla's advantages can be sustained. Especially in the Chinese market, it is difficult to avoid how to break through the intelligent application on the premise of meeting the national data security requirements.
With the transformation of traditional automobile enterprises and the rise of more and more new forces, Tesla's scenery has not been as good as the previous two years. Standard&Poor's Global Mobile once pointed out that although Tesla is still the best-selling electric vehicle brand in the United States, its leading position in the electric vehicle market is being weakened as its competitors introduce more and more affordable models.
It is not difficult to see from the result of BYD's sales volume surpassing Tesla. Although Tesla is still at the top, BYD's counterattack speed is obviously faster than Tesla's growth rate.
"The car market is not big fish eat small fish, but fast fish eat slow fish. Only in the fast process can you overtake," Wang Chuanfu said at the shareholders' meeting.
Looking at the whole new energy vehicle market, Tesla's competitors are far more than BYD. It is just a competition in sales volume, which puts BYD and Tesla on the same level of challenge. However, it should be pointed out that the key to the success of the new energy vehicle battle is not only the sales data, but also the comprehensive competition of various factors such as profit margin, market share, software service ecology, etc.
The king of new energy vehicles is bound to be an all-around player without short board, rather than a single champion. Especially in the field of new energy vehicles with increasingly fierce competition, how to break through the tight encirclement in the field of competition is a test of the all-round ability of enterprises.
New energy vehicles will usher in a key period of reshuffle in 2023. For the head players, how to stabilize the leading position is the most important; For start-ups, survival is the only way to qualify for promotion.
The winner is uncertain before the end. However, it can be predicted that in the era of smart electric vehicles, the new forces of car building will have the opportunity to become the new "king", and the traditional car companies will also continue to lead the "glamour", and everything is possible.