2023, the battle between Tesla and BYD

As a catfish introduced into China's new energy vehicle market, Tesla's performance in domestic and foreign markets has always attracted much attention, and it is even regarded as an important example for domestic car companies to refer to. Coincidentally, as the leader in the domestic market, BYD's rapid rise as a "dark horse" in the domestic market has also attracted widespread attention in the industry.

It is worth mentioning that last year, faced with unexpected impacts such as the Shanghai lockdown, U.S. interest rate hikes, and supply chain tensions, the two car companies were in very different situations. However, from a full-year perspective, both Tesla and BYD have achieved performance that exceeds expectations. In particular, BYD has achieved major breakthroughs in the past year, and the pace of catching up continues to accelerate. This has also created opportunities for the two car companies to compete for new energy sources. The car's top spot adds more variables.

The unexpected answers from “car kings”

Recently, Tesla announced its latest financial report for 2022. Financial report data shows that in the fourth quarter of 2022, Tesla’s revenue reached US$23.4 billion, an increase of 37% over the same period last year; Tesla’s total revenue in 2022 reached US$81.5 billion, a year-on-year increase of 51%; in 2022, Tesla achieved an operating profit margin of 16.8% and net profit doubled. Overall, Tesla performed well last year, both in terms of revenue and net profit.

Strong revenue and net profit growth were mainly due to its record production, sales and delivery volumes. In 2022, Tesla's total global deliveries will be 1.31 million vehicles, an increase of 40% compared to 2021. Data from the Passenger Car Association shows that the Shanghai Gigafactory’s annual delivery volume reached 710,000 vehicles, more than half of Tesla’s global delivery volume. Among them, the delivery volume of Model Y alone has reached 315,000 units, which is equivalent to the sum of new car-making forces such as "Wei Xiaoli" and almost equals Tesla's delivery results of all models in 2021.

Although Tesla continues to perform well, BYD's performance is obviously better in terms of acceleration and explosive power. According to financial report data disclosed on January 30, BYD's annual operating income is expected to exceed 420 billion yuan in 2022, doubling from 216.142 billion yuan in 2021. This is also the first time that BYD has exceeded 200 billion yuan in revenue. A major leap has been achieved again; looking at net profit, its net profit in 2021 is only 3.045 billion yuan. By 2022, its estimated net profit has reached between 16 billion and 17 billion, achieving a year-on-year increase of more than 400 billion. % growth, far exceeding the 12 billion to 15 billion expected by the outside world.

In terms of delivery volume, BYD is in a state of continuous explosive growth, with full orders throughout the year. Data shows that BYD's car sales in the four quarters of 2022 reached 291,300, 355,000, 538,700 and 683,000 respectively, basically showing an acceleration trend from quarter to quarter.

On a quarterly basis, Tesla's growth rates varied from quarter to quarter, while BYD showed a trend of "acceleration" throughout the year. Data shows that Tesla's revenue growth rates from the first to the fourth quarter of 2022 are 81%, 42%, 65%, and 37% respectively. The overall growth rate is relatively even, with large differences in individual quarters, and even "previous" trends. high and then low” phenomenon. In contrast, BYD's revenue growth rates in each quarter reached 63.02%, 67.91%, 115.59%, and 114.66% respectively, showing a steady acceleration and sequential increase in each quarter.

Overall, despite enduring various tests, the two major new energy vehicle companies have achieved relatively satisfactory results in 2022. Of course, judging from the reaction from the outside world, Tesla's expectations have almost been met, and BYD's bucking the trend can be called an unexpected surprise. After all, BYD used its 16 billion net profit to prove that electric vehicles In this era, Chinese car companies can get rid of the dilemma of "increasing revenue without increasing profits" and really make money on their own.

Tesla insists on standardization for decisive victory

In fact, from model S, core products. From the overall strategy, it has taken the winning route of hot-selling cars from the beginning, and standardization and scale are the core keys.

On the one hand, Tesla continues to increase Tesla's popularity in corresponding markets by continuing to produce hot-selling standard cars, occupying the market as soon as possible during the period of rapid expansion of electric vehicles and driving large-scale growth. From the model S born in 2012, to the model A complete product matrix.

Today, many of these four models have set sales records for electric vehicles. For example, the global sales of model Y have exceeded 510,000 units, and the more popular model 3 has become the first best-selling electric model to exceed 1 million units. In addition, the model X, which was born in 2015, and the model S, which was born earlier, have sold 100,000 units worldwide so far, occupying a place in the luxury car market. From a price point of view, model Y/3 occupies the mid-to-high-end market in the range of 300,000-400,000 and 200,000-300,000 respectively. It is Tesla's core main model in the past three years.

Judging from the price changes and development and improvement processes of the three cars, they mainly include configuration improvements and price adjustments. Take model Y as an example. Model Y was actually launched in 2019. It was initially divided into four versions: high-performance version, long-range version, standard version, and dual-motor full-drive version. Later, it was mainly modified and priced. The price is based on Different versions have gradually and steadily dropped from the previous 300,000-500,000 range to the 300,000-400,000 range. They have basically gone through the process of first raising prices and then lowering prices. The situation of model X and model 3 is similar.

Generally speaking, Tesla’s product strategy is as Musk wrote in his letter to investors more than ten years ago: “Build high-end models to increase brand awareness, and then continue to create best-selling low-priced models to increase brand awareness.” The popularity of electric vehicles will accelerate the electrification of the world’s automobiles.”

On the other hand, relying on the huge demand for popular products, we will continue to ramp up production capacity to maximize its scale effect, thereby achieving profit growth as soon as possible and maximizing the efficiency-winning strategy. While executing its best-selling electric vehicle strategy, Tesla's continuous backlog of orders forced Musk to find ways to increase the production capacity of electric vehicles in order to shorten user waiting times and increase delivery volume. To this end, Tesla has shifted from relying on OEMs from other car companies to building its own super factories, and relying on the operation of smart factories to achieve intelligent car production, thus step by step increasing its production capacity from less than 5,000 units per month to The weekly output exceeds 5,000 vehicles, gradually realizing a production system that can easily respond to market demand.

Based on highly shared standard parts and economies of scale, as well as the continuous deletion of unnecessary parts or parts that users do not care about (the number of parts has been reduced from 30,000 to 20,000), the difficulty of automobile manufacturing has been continuously reduced. Costs continue to fall and gross profit margins continue to rise, which has laid a good foundation for Tesla to implement its price reduction strategy. In addition, Tesla has also improved the production efficiency of vehicle chassis and batteries by launching an integrated die-casting method. At the same time, Tesla's Shanghai factory also utilizes the two-dimensional and three-dimensional space to the extreme to achieve the purpose of continuing to improve efficiency.

Under this set of ideas, Tesla gave up the possibility of active and precise customization, focused on the core appeal of popularization, and placed its core direction on the goal of promoting the popularization of electric cars (it has basically not launched new cars in recent years, and its main activity is localization Production, vehicle revisions, production capacity ramping, etc.), this is also the core key to its rapid success in sales and performance after the explosion of the electric vehicle market.

BYD puts differentiation first

Compared with Tesla, which relies on a single popular model (currently only 4 core models), BYD's models have reached 15 models, and have formed two major platforms, Dynasty.com and Haiyang.com, as well as hybrid and pure electric models. The two-part world pattern has formed a very different development idea from Tesla, and this development strategy is the result of many factors.

First, although BYD started early in the electric vehicle market, it did not advance aggressively. Therefore, in the early stages of domestic electric vehicle development, it did not have much of a leading advantage in the C-end market.

BYD has already been involved in this field as early as 2009 when Tesla launched its early electric vehicles, but for a long time it has mainly produced public transportation, such as electric buses and customized new energy taxis for the B-end market. It is difficult to describe the influence of the C-end market. In addition, in terms of high-end, based on the basic national conditions of the country (developing country), BYD has been slow to launch higher-end electric models. In the early days, C-end cars were mainly e-series and hybrid models. The truly revolutionary and mature models are The BYD Han launched in 2020, the Tang which was subsequently revised, and the Ocean series subsequently launched, etc. The launch of these models truly kicked off BYD's electrification era.