Tesla’s share price has zoomed higher this year as the Elon Musk-run company seems to have gotten its mojo back after the CEO was diverted by his loss-making Twitter adventure in 2022.
Tesla’s sales are rising nicely – especially in China – after the problems with the Covid lockdowns last year and the price cutting in both the US and Chinese market late last year and early this year.
Tesla’s shares are rising even more nicely than sales – up 117% year to date.
The continuing strength in EV sales and expectations of another solid year in 2023 means demand for lithium-ion batteries and other materials (such as rare earths, copper and nickel) will not slacken if the Chinese economy continues to stutter.
China is exporting more conventionally powered vehicles (and a rising number if EVs, thanks to Tesla and BYD) and those sales will come under pressure if global demand softens and recessions spread into European, US and other markets in the next year.
Of all the major global car groups, Tesla is the only one straddling the developing Chinese market, the emerging US market and the nascent European market – that’s a rate position for any company and for the Australian lithium and renewable materials sectors.
…………
No Tesla fears though for Wang Chuanfu, BYD’s chairman and president who told the company’s 2022 AGM yesterday that the company’s scale, brand and technology advantages will help it outperform its peers in future competition.
Wang said that for BYD (which stopped making conventionally powered cars in March, 2022), the toughest period is over and it will have “a strategic opportunity period”
He said BYD will leverage its existing industrial chain advantages, cost advantages, technology advantages and product advantages to further optimise its brand image and lead China’s NEVs to the world.
BYD has been vigorously expanding its production capacity in various regions since last year, and has now basically solved the problem of imbalance between supply and demand, Wang said.
The company’s current production capacity and output of components can meet future market demand, he said, adding that BYD has made arrangements to meet the growing demand in overseas markets (such as Thailand where a big plant is being built).
In late March Wang told an investor day in China that BYD was looking to sell at least 3 million units this year and hoped to get that figure as high as 3.6 million – including between 600,000 and 800,000 exports.
But for all Tesla’s gains and the surge in the share price, its big Chinese rival, BYD, is scooting way ahead of it in the Chinese market – a fact not well recognised by investors who have only pushed its Hong Kong shares up 27% this year.
Tesla has the better margins – its Shanghai plant is said to be the most efficient and lowest cost car plan globally, but BYD his driving volume and grabbing market share.
…………
The May figures from BYD were startling – China’s Passenger Car Association (CPCA) figures this week showed BYD sold a record 239,092 vehicle last month, up 14% from April and more than double May, 2022, CPCA data showed.
That’s the new all-time record (the previous one was 234,598 units in December 2022 when sales were inflated by the end of year rush to buy cars before most purchase subsidies expired on December 31).
May saw BYD’s battery-electric (BEV) and plug-in hybrid (PHEV) sales neck and neck (PHEVs have usually outsold BEVS in the past).
BYD said it sold 119,603 BEVS (up 124% year-over-year) and 119,489 (up 96% year-over-year) PHEVS. In addition to the 239,092 (up 109% year-over-year) BYD also sold 1,128 commercial electric vehicles for a total of 240,220 plug-in vehicles last month.
Out of the total number, some 10,203 BYD plug-ins were exported. BYD sold 1,488 of its Atto 3 model in Australia in May and topped the NZ market (ahead of Tesla) for the third month in a row last month.
The May number took BYD’s annualised sales rate to 1.4 million BEVs, slightly higher than Tesla’s 2022 total sales of 1.3 million, although Tesla hopes to sell 2 million EVs in calendar 2023. BYD is looking to sell 250,000 units a month later this year and is on track to top 3 million by the end of the year.
So far this year, BYD has sold almost 1 million passenger plug-in electric cars, which is 98% more than a year ago (when the Covid lockdowns crippled demand).
BYD plug-in sales year-to-date: BEVs: 488,614 (up 92% year-over-year) and PHEVs: 507,862 (up 105% year-over-year). Total: 996,476 (up 98% year-over-year)
Meanwhile, Tesla did OK in May in sales and exports from China.
According to the CPCA’s early sales data (the final figures are out next week) Tesla’s wholesale vehicle shipments (local retail sales and export) last month amounted to 77,695 units, up slightly from April’s 75,842.
Compared to the previous year, when China was affected by a lockdown, the volume more than doubled (up by 142 percent year-over-year).
For the first five months of the year, Tesla’s wholesale sales topped 382,000, 77% more than a year ago.
…………
The CPCA said on Thursday that China’s retail sales of passenger cars rose 28.6% from a year earlier to 1.74 million vehicles.
Retail sales of new-energy cars, which include electric and plug-in hybrid cars, grew 60.9% in May from a year ago to 580,000 vehicles, the association said. That was 7,000 short of an early estimate last week because of a slight dip in the final days of May.
The association warned that June sales to decline, as a tax cut that went into effect in June 2022 (to help boost sales after the long lockdown at the time, especially in Shanghai and parts of Beijing and several other major cities).