Tesla VS BYD: One starting point, two ways to win

In 2011, Musk, who was not yet the father of nine children, was asked in an interview with Bloomberg "What do you think of BYD?" Before the host finished speaking, he couldn't help laughing, and then said bluntly, "Have you seen their cars?", "They have no skills", the words are full of ridicule and disdain.

However, ten years later, the situation has changed dramatically, and Tesla's attitude towards BYD has changed from disdain to concern now. Last month, former Tesla board member Steve Wesley said in an interview that BYD is currently Tesla’s only real challenger.

Before 2020, there was no overlap between the two companies, but with the launch of the domestic Model 3 and Y, the two sides began to compete, even tit-for-tat. Last month, Tesla announced a price cut, mainly because its backlog of orders was decreasing, and this was indispensable to the "contribution" of BYD's Han, Seal and Tang cars .

Interestingly, the two parties are not all competition, but also cooperation. Tesla wants to install cheaper batteries to expand its market share, while BYD also hopes to promote its battery business to the international market. The two parties hit it off.

As the top 2 players in the global TOP 2 market, Tesla and BYD are both dominant players in their own countries, and the confrontation between these two companies will also become the biggest attraction in the global new energy market.

01

Origin: Small-town problem solver VS talented young immigrant

Wang Chuanfu and Musk can be said to be representatives of the "Chinese Dream" and the "American Dream" respectively.

Wang Chuanfu was born in a peasant family in Anhui. He graduated from Central South University and received a master's degree from the Beijing Institute of Metal Research, Chinese Academy of Sciences. He became the battery king in 2000, started building cars at the age of 37, and launched the first electric car F3DM in 2008. In his car-making career of more than ten years, Wang Chuanfu adhered to the strategy of keeping a low profile - building fuel vehicles while waiting for the explosion of electric vehicles. Until April this year, he officially announced the suspension of sales of fuel vehicles, and BYD threw away its "crutch" and soared.

Musk was born into a wealthy family in South Africa. He showed talent for programming since he was a child. At the age of 12, he sold a game he wrote for US$500. In 2002, he received US$170 million from the sale of Paypal shares. Then he joined the wave of building electric cars. In 2008, he built After the release of the first electric car Roadster, Musk and Tesla experienced ups and downs, and turned around after the launch of Model 3.

But in essence, the genes of the two companies are significantly different. BYD's two core businesses are energy + transportation, so new businesses such as photovoltaics and cloud rail have been derived, while Tesla is more like an AI company facing the future. , Tesla Bot "Optimus Prime" was displayed on this year's AI Day.

02

Fengshen: Market share is approximately equal to Apple + Samsung in the automotive field

In front of BYD and Tesla, the sales volume of other new energy vehicle companies are Others. The two together account for more than 30% of the global new energy vehicle market, equivalent to Apple + Samsung in the mobile phone market.

In the first three quarters of this year, BYD sold a total of 1.18 million units. In October just past, it delivered another 210,000 units. Its global dominance is unshakable. Among the 10 best-selling new energy vehicles in the world, BYD owns 6.

Tesla's delivery volume is slightly lower, but it still has 900,000 vehicles. However, Tesla has two of the best-selling pure electric vehicles in the world. Model Y has sold 500,000 units in the first three quarters, far ahead of other competitors. Even Musk boasted that Model Y will become the most valuable model in the world this year, and will hit the top sales volume in the world next year - Corolla trembled after hearing this.

03

Products: Tesla is more like Apple, BYD is more like Volkswagen/Toyota

On the way to the top of sales, BYD is large and comprehensive, while Tesla is small and refined.

Tesla has adopted a typical large single product strategy, with only 4 models on sale, with the main sales being Model 3/Y. One fact is that Model 3 is already 6 years old, and Model Y is actually an "old car" released three years ago. This performance is similar to that of the iPhone12/iPhone12 Pro, which was released in 2020 and should have been outdated but has been selling so well (cumulative sales exceeded 100 million).

BYD implements the car-sea strategy. It owns the Dynasty series, Ocean series (subdivided into marine life and warship series), Denza D9, and a planned high-end series of off-road models. BYD has more than 25 models on sale. It is not uncommon for BYD to have two cars with similar appearance, interior and powertrains (such as Qin PLUS DM-i and Destroyer 05, Tang EV and Corvette 07), which is quite similar to the sister cars of Volkswagen and Toyota in the north and south.

From 100,000 to 1 million, from 20 to 50 years old, there is always a BYD that suits you.

04

Profit: Why is one Tesla worth four BYDs?

An amazing fact is that the gross profit of one Tesla (approximately 122,600 yuan) is equivalent to four and a half BYDs (27,500 yuan).

Underlying this difference is a set of multiplier effects. In the first half of this year, Tesla’s average revenue per vehicle was US$55,700 (approximately 401,700 yuan), and its gross profit margin was as high as 30.6%. BYD's average bicycle revenue is 169,000 yuan, and its gross profit margin is 16.3%.

However, BYD is actually the domestic car company with the highest gross profit on bicycles, and it is also a first-class company internationally. It’s not that BYD is too good, but that Tesla is too powerful.

It is worth mentioning that because BYD adopts a dealer model rather than a direct operation model, it needs to transfer part of its profits to dealers, so the gross profit gap between BYD and Tesla will actually be smaller.

Few people realize that although Tesla is not cheap, it is actually one of the most aggressive cost control car companies in the world. The secret of Tesla’s high gross profit lies in the fact that as the brand goes up, the price goes down. In short, it means pointing up the high and selling down the price .

Tesla, which mainly sells two cars, has a single-car price comparable to BMW, but has more common parts (Model 3/Y shares 70% of parts), a more streamlined production process, and an evolved production assembly line. , and fewer but larger plants. They help Tesla save all unnecessary expenses in the production process and create a unique gross profit margin level among car companies.

05

R&D and technology: Tesla takes the lead in intelligence, BYD dominates the three electric

Tesla and BYD are two very efficient car companies in research and development. In the past seven years, they have each invested approximately 50 billion yuan in research and development, in exchange for a large amount of self-developed technology, but they have chosen different directions.

Tesla has invested more in intelligence and has come up with a series of software and hardware related to intelligent driving - from the underlying electronic and electrical architecture and chips to the upper-layer intelligent driving software applications. When car companies want to work together with suppliers and startups to develop intelligent driving, Tesla has taken the lead and turned the annual AI Day into a Spring Festival Gala for autonomous driving.

BYD is making unremitting efforts in investing in electrification, and has come up with IGBT/SiC chips, DM-i, and blade batteries. Systematic three-electricity capabilities not only provide support for BYD's products, but also export technology to the outside world. Toyota, which BYD once imitated, is a student of BYD in the field of electric vehicles.

The different choices of technology focus determine the different characteristics of the two companies today: intelligence gives Tesla a higher premium capability, while the platform-based three-electricity capabilities allow BYD to quickly launch various cost-effective models and occupy the market. various market segments.

But in an era full of uncertainty, both are leveraging each other's strengths: Tesla is trial-producing 4680 battery cells at its Texas factory, and BYD is leading the semiconductor team to start developing its own smart driving chips. Wang Chuanfu himself said that the first half of new energy vehicles is electrification, and the second half is intelligence.

06

Vertical integration: Tesla bypasses Tier-1, BYD itself is Tier-1

As TOP2, Tesla and BYD have both driven the development of the electric vehicle industry chain, but they are also disruptors of the traditional pyramid supply chain in the automotive industry.

Because it is difficult for traditional Tier-1 to provide customized products that meet demand (or provide black box products), Tesla often has direct contact with Tier-2 and jointly develops with them or lets them manufacture and develop their own products.

BYD has a tradition of vertical integration. It can produce its own products and never outsource them. In 2019, it integrated its parts department into a Fudi company. On the one hand, it produces and sells its own products, and on the other hand, it opens to the market. Fudi Battery once said, "Almost every car brand you can think of is talking about cooperation with us." Of course, this includes Tesla.

07

Going overseas: Tesla was born global, BYD “must first settle domestic issues before dealing with external forces”

Right now, Chinese car companies are working hard to break into overseas markets, and Tesla is already waiting for them there.

Selling cars overseas has never been a problem for Tesla. With the United States, China, and Europe as the core, the three major markets contribute approximately 40%, 30%, and 20% of Tesla's orders. In an era when the automobile industry is also moving towards de-globalization, Tesla has gained unanimous welcome from people around the world - in the three major markets of the United States, China and Europe, Tesla Model 3/Y has achieved the top sales.

BYD, on the other hand, believes that in order to fight against foreign aggression, it must first settle domestic problems. More than 97% of its sales are domestically contributed, and it has only recently expanded overseas to Japan, Germany and other established countries. But the recent situation shows that if you win in the hellish Chinese market, you can also have a good start overseas - the German car rental company Sixt recently placed an order for 100,000 electric vehicles from BYD. The German media denounced it as "like a traitor to the country". "This is a slap in the face to German car manufacturers."

08

The stock god’s choice: short Tesla, bullish BYD

Buffett has publicly been short on Tesla many times, saying that Musk is not a mature investment target. Part of the reason may be that Buffett bought 225 million shares of BYD in 2008. This investment once made Buffett's profit 30 times.

It's just that if the stock god chose to invest in Tesla in 2013, he would have made hundreds of times. As Tesla became the world's largest car company by market value, Buffett's attitude towards Musk never understood him, but turned to "respect".

The stock god seems to have been slapped in the face, but in the longer term, Tesla has been losing money before 2020, while BYD has always been making money.

09

National will: the visible hand behind Tesla and BYD

As BYD's brand breaks through and Tesla's $25,000 Model 2 is about to be launched, the collision between the two companies will become more direct and intense.

Behind the two companies, China and the United States have pushed the competition for new energy vehicles into a fierce stage in the form of subsidies.

Before 2019, buying a Tesla in the United States will receive a federal tax credit of US$7,500 (Tesla’s sales volume will decline after reaching 200,000 vehicles), which means that the US federal government has indirectly provided Tesla with at least US$1.5 billion. financial subsidies. If dual-point revenue is included, the figure is even more astonishing—Tesla has earned $6.4 billion from selling carbon credits since its inception.

Similarly, BYD has also gained a lot from new energy subsidies and points transactions, with points revenue reaching 2.2 billion yuan in 2020 alone. In the past five years, the new energy subsidies BYD has received from the government have been even more astonishing, accumulating more than 12 billion yuan, accounting for half of its net profit in the past ten years.

On the way to the top of Tesla and BYD, the two countries have poured out real money to retain the crown jewels of their manufacturing industry.

Taking the collision between BYD and Tesla as a bright line, this industrial competition for smart electric vehicles will continue.