BYD scored another point in the fight with Tesla this Wednesday, reporting quarterly revenue that surpassed Elon Musk’s automaker for the first time since the two giants began competing for global sales of electric vehicles.
Revenue at China’s best-selling automaker rose 24% year-on-year to 201.1 billion yuan (R$163.19 billion) in the three months ended September 30. The result frustrated market expectations, but surpassed those of Tesla, whose sales reached US$25.2 billion (R$145.80 billion) in the same period.
BYD’s net profit rose 11.5% to 11.6 billion yuan, beating consensus, after the automaker sold an unprecedented 1.12 million electric and plug-in hybrid vehicles in the latest quarter.
Its profit, however, is still overshadowed by the US$2.2 billion that Tesla made.
BYD and Tesla have emerged as disruptive threats to legacy automakers, especially as Volkswagen, Ford, Stellantis and General Motors struggle on the path to profitability with their transitions to electric vehicle production.
With consumer demand for electric cars decreasing, BYD is less exposed than Tesla, considering its strong lineup of hybrid vehicles.
Hybrid vehicles are one of the main reasons for Shenzhen-based BYD’s revenue growth. With the updating of the powertrains (engine, clutch, gearbox, etc.) of some vehicles, the manufacturer has models that allow a range of more than 2 thousand kilometers. Another advantage for BYD is its vertically integrated supply chain, and manufacturing a larger number of parts in-house gives it a cost and scale advantage to produce cheaper cars.
Meanwhile, Tesla is dealing with an increasingly limited and obsolete lineup of electric vehicles and has focused on increasing production of its Cybertruck and expanding the use of its partial automation system, sold as self-driving full.
Still, Tesla’s AI potential and its longest-running lead in electric vehicle sales have helped cement its place as the world’s most valuable automaker. BYD is in third place, behind Japan’s Toyota. but ahead of Germany’s VW, Mercedes and the three Detroit car manufacturing giants.
BYD has also benefited from a resurgence in domestic demand in China, which has been boosted by an enhanced package of national and local government subsidies aimed at encouraging consumers to switch from gasoline cars to electric and hybrid vehicles. These local sales helped protect BYD’s results against the resistance the brand faces abroad.
This week, the European Union imposed higher tariffs, reaching 45%, on China’s electric vehicles, increasing trade tensions between the world’s main exporting powers. BYD also doesn’t sell passenger cars in the US because of tariffs.
BYD’s profit outlook for the latest quarter looks even stronger as it benefits from sales leadership in China — the world’s largest auto market. The last three months of any year are generally considered the best sales season. And in addition to subsidies, central government agencies are being ordered to increase purchases of electric vehicles.
BYD is also on track to achieve its revised annual sales target of 4 million vehicles, based on its current run rate. It sold around 2.74 million vehicles through September. Citibank Inc. estimates that BYD could sell up to 500,000 units per month by November.
Hong Kong-listed BYD shares closed down 0.7% on Wednesday, trimming year-to-date gains to 37.6%. Tesla shares have risen 4.4% since January.
