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BYD’s Electric Drive To Success

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IAA Mobility 2023 International Motor Show

Electrifying Potential

BYD (OTCPK:BYDDY) (OTCPK:BYDDF) has been sparking a lot of attention as “the Better Tesla”. While Elon Musk’s venture claims the electric vehicle limelight, BYD quietly surges ahead with faster growth rates, tighter supply chain control, and a significantly lower valuation. It’s like an underdog with a secret weapon.

BYD: The Sleeping Giant of the EV Market

The battery is the heart and soul of an electric vehicle, and BYD has its fingers in the lucrative battery pie, not just as an EV manufacturer but also as a battery producer. These powerhouses are not only costly; they are also pivotal for an EV’s performance. With BYD mastering the game of manufacturing its own batteries, it has carved out a commanding position in the EV industry; those who rely on BYD for their battery supply indirectly fuel the company’s profits and revenues when their businesses flourish – an advantage other EV players lack.

Tesla And BYD: A Look Beyond Automobiles

Tesla enthusiasts often tout the company’s non-auto business units, such as energy storage and production. However, while Tesla may boast diverse business arms, its reliance on auto revenues and profits cannot be overstated. The truth is, when it comes to energy storage, BYD is playing the same game as Tesla – offering home energy storage systems and reaping profits across the entire value chain as it produces batteries itself. But wait, there’s more. BYD has managed to stay ahead of the curve in the commercial electric vehicle market, where it has been manufacturing buses and trucks for an extended period, putting it miles ahead of Tesla’s Semi trucks which are yet to make a significant dent in the market. While BYD’s pioneering work in the commercial EV market might be flying under the radar, it presents a golden opportunity for investors eyeing the stocks of this relatively undervalued giant in the EV industry.

Risks to the Bright Outlook

While BYD undoubtedly holds an edge over Tesla and other EV players, there are still potential risks lurking in the shadows. Firstly, being a Chinese company, BYD is exposed to higher political risks, with uncertainties around China’s support for its top companies. Secondly, despite Tesla’s history of overpromising and underdelivering on its self-driving technology, there remains a slim chance that Tesla might one day hit a home run should it solve self-driving under all conditions before anyone else. This game-changing move could tip the scales in Tesla’s favor over BYD and its competitors.

Is BYD the Ultimate Investment?

In a market rife with competition, BYD might just be the diamond in the rough that has been overlooked. Its ability to scale up production without hitting bottlenecks, coupled with a superior delivery growth rate and expanding profit margins in the midst of the EV price war, make a compelling case for the company’s prowess. With its autonomous control over battery tech and production, BYD stands as a beacon of independence when compared to EV manufacturers reliant on key suppliers. And let’s not overlook the fact that BYD is ridiculously cheap for an EV company, trading at a forward earnings multiple of 17, a stark contrast to the sky-high valuations of its peers. This might just be the pot of gold at the end of the rainbow for those seeking EV exposure. Even Warren Buffett seems to concur, having chosen to own BYD over other players in the EV space.

Certainly, this doesn’t guarantee automatic share price gains, but in the tumultuous landscape of the EV market, BYD is positioned to deliver substantial gains in the years to come. However, investors should keep in mind that automobile companies by nature are cyclical and might face headwinds during a potential recession.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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