Tesla vs. BYD: The 2024 EV Showdown
Two electric vehicle (EV) giants, Tesla TSLA and BYD Co Ltd BYDDY, are locked in a competitive battle for the top spot in the global market. In an unexpected turn of events during the fourth quarter of 2023, BYD surpassed Tesla for global EV sales, delivering a remarkable 526,409 vehicles to Tesla’s 484,507. Despite this setback, Tesla ended 2023 as the largest EV seller with a total of 1.8 million deliveries. As we move into 2024, both companies are gearing up for a challenging race. Let’s delve into which stock currently presents a stronger investment opportunity: BYDDY or TSLA.
Bidding for the 2024 EV Title
BYD has been on an impressive sales trajectory, consistently breaking records. In November 2024, the company sold 506,804 new energy vehicles (NEVs), marking two consecutive months of exceeding half a million sales. This total included 305,938 plug-in hybrids (PHEVs) and 198,065 pure EVs. BYD is already ahead of its ambitious target for 2024, reaching 3.74 million sales through November, which includes over 1.5 million all-electric vehicles in the year to date.
On the other hand, Tesla delivered over 1.28 million units by September 2024. However, Tesla does not provide monthly sales updates, leaving some uncertainties until it releases its year-end figures. For 2024, TSLA anticipates only modest growth compared to the 1.8 million deliveries in 2023.
Why BYD is Positioned for Success
BYD’s impressive growth can be attributed to its innovative, cost-effective battery technology along with a vertically integrated manufacturing process that encompasses everything from resource mining to battery production. Its lithium iron phosphate (LFP) battery technology is both economical and provides improved safety and longevity.
The company’s diverse product range appeals to various customer segments. Affordable models like the Seagull and Denza are popular, while its premium Yangwang brand targets higher-end buyers. Successful hybrids and EVs, such as the Song and Qin series, remain among China’s best-selling vehicles. Their latest DM 5.0 hybrid system and e-Platform 3.0 emphasize efficiency and cost-effectiveness.
Globally, BYD is expanding its reach in Asia, Europe, and Latin America, making notable gains in Japan, Australia, and Singapore. The partnership with Uber, aiming to supply 100,000 EVs to the ride-hailing platform, exemplifies its ambitious strategy.
In November 2024, BYD celebrated a key milestone, producing its 10 millionth NEV. This achievement highlights its influential presence in the global market and reflects the appeal of its varied lineup and budget-friendly options, reinforced by enriching support from China’s EV ecosystem.
Why Tesla Continues to Shine
Tesla’s manufacturing scale in the EV space is unmatched, allowing it to achieve cost efficiencies that most competitors struggle to replicate. Potential obstacles, such as diminished subsidies under potential changes in administration, do not seem to faze Tesla. Its strong operating model positions it well to remain viable even without extensive government backing. CEO Elon Musk anticipates 20% to 30% growth in overall vehicle deliveries next year, indicating a positive outlook as gross margins improve.
Moreover, Tesla is not solely reliant on vehicle sales. Its Energy Generation and Storage division, which includes products like the Megapack and Powerwall, is significantly boosting revenue. This segment boasts high profit margins and is a crucial growth driver as Tesla ramps up production at its Megapack factory to meet rising demand.
The company’s extensive global charging network, featuring over 60,000 supercharger connectors, also stands to enhance profitability as automakers adopt Tesla’s North American Charging Standard, transforming this model into a lucrative potential revenue source.
With a solid balance sheet and ample liquidity, Tesla can continue to innovate and expand. Additionally, advancements in autonomous vehicles, including upcoming robotaxi services, position the company for long-term growth.
Forecast for BYDDY & TSLA
The Zacks Consensus Estimate for BYDDY in 2024 suggests a year-over-year sales growth of 25% and an EPS increase of 31.5%. Projections for 2025 also indicate continued growth, with sales estimated to rise by 20.5% and EPS by 24%, and recent estimates have shown upward trends for both years.
Image Source: Zacks Investment Research
Conversely, the Zacks Consensus Estimate for TSLA forecasts moderate growth with a 3% increase in sales for 2024 and a more robust 17.4% for 2025. While EPS for 2024 is projected to contract by 20.8%, a strong rebound of 32.4% is expected in 2025, along with uptrends in the recent quarterly and yearly estimates.
Image Source: Zacks Investment Research
BYD: A Cost-Effective Option Compared to Tesla
Currently, BYDDY trades at a forward sales multiple of 0.78X, significantly below its five-year median of 1.47X. In contrast, TSLA’s forward sales multiple stands at 10X, well above its historical median of 7.23X.
Image Source: Zacks Investment Research
Both Stocks Are Appealing Picks
Both Tesla and BYD present compelling cases for potential investors. BYD stands out for its cost-efficiency, diverse product range, and increasing global presence, all while being attractively priced. Additionally, BYD offers a dividend yield of 1.54%, providing an income stream for shareholders.
Tesla, with a focus on reinvestment for future growth, does not provide dividends. However, its strides in EVs and autonomous vehicles, along with its energy storage business and strong global branding, contribute to long-term potential. Tesla transcends traditional car manufacturing, representing a solid choice for investors seeking innovation and growth.
Currently, both companies carry a Zacks Rank #1 (Strong Buy), indicating a bullish outlook. You can see the complete list of today’s Zacks #1 Rank stocks here.
Five Stocks Set for Significant Growth
These select stocks were handpicked by a Zacks expert as top candidates to potentially gain +100% or more in 2024. While past recommendations have included significant winners, not every stock will succeed.
A majority of these stocks are currently under the radar on Wall Street, providing an excellent entry opportunity.
Check Out Today’s 5 Potential Stars >>
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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