Short for “Build Your Dreams,” BYD Co. Ltd. (BYDDY) BYD has quickly become China’s version of Tesla (TSLA). In March 2022, the company stopped making combustion engine vehicles to go full electric, or at least mostly electric. It now produces both battery electric vehicles (BEVs) and hybrids, writes Chris Preston of Cabot Wealth Network.
The shift in focus paid immediate dividends in a country that loves the electric vehicle: BYD’s revenues leapt to $63.1 billion in 2022 from $33.5 billion in 2021 and $22.7 billion in 2020. In 2023, BYD has grown revenues by double digits every quarter, and is likely to exceed its stated goal of selling more than three million electric vehicles.
What makes BYD unique is the wide array of price points on its vehicles. The company just released the “Seagull,” the cheapest electric vehicle in existence at a starting price of a mere $10,200 (or 73,000 yuan). It also makes the most expensive mass-produced car in China, the Yangwang U8, an off-road hybrid that costs $159,000.
BYD’s “something for everybody” identity – with cars for consumers of all income ranges – has Elon Musk spooked. It’s a big reason why Musk and Tesla have repeatedly slashed prices on some of their top models (Model 3 and Y) this year. The goal is to better compete with BYD not only in China – where BYD is far and away the largest automaker – but also globally, as BYD is just scratching the surface of its worldwide expansion.
Notably, BYD does not yet sell cars in the US, and likely won’t for some time in part due to current frigid relations between the US and China. But even without an American presence, BYD sold roughly the same number of BEVs worldwide in the third quarter of 2023 as Tesla (431,603 to Tesla’s 435,059), and could top Tesla as the global electric vehicle leader soon.
And yet, BYD stock has been a bit “meh.” Plus, the stock’s tendency for fits and starts has been maddening, with investors seemingly selling off after every big move, including an 18% faceplant in the second half of November 2023.
All the ups and downs should dissipate once China’s recovery picks up steam, and there are signs that it is after its GDP growth (4.9%) exceeded expectations (4.4%) in the third quarter. US investors will likely be more willing to take on the “risk” of snatching up shares of a Chinese EV stock. And with that stock recently trading at less than 15 times forward earnings estimates – and exactly a third off its 2022 highs – this is an ideal time to buy.
