Will BYD Leave Tesla In The Dust In EV Sales?

Key Points

• Chinese EV maker BYD posted Q3 sales that nearly match Tesla's total.
• For the full year, BYD is targeting annual sales of approximately 1.8 million EVs, the same as Tesla's target.
• BYD's three-year sales growth rate stands at 65%, higher than Tesla's rate of 47%.

Tesla Inc. NASDAQ: TSLA stock is within striking distance of clearing a cup-with-handle base, but with company news mixed, is there likely to be a catalyst for a breakout soon?

If investors seem undecided about Tesla at the moment, the same is true for Chinese EV maker BYD Co. Ltd. OTCMKTS: BYDDF, which is correcting while total vehicle sales surpass Tesla's.

BYD sold 431,603 electric vehicles in the third quarter, in hot pursuit of Tesla's total sales of 435,059. It's expected to achieve yearly sales of about 1.8 million cars, the same as Tesla's sales target.   

BYD started out as a battery company, but it's ramped up automotive production quickly in recent years. It also sells gasoline-electric hybrid vehicles and is on track to become one of the top 10 automakers worldwide. 

MarketBeat's BYD analyst ratings show a consensus view of "buy," although because the stock isn't yet U.S.-listed, other than over-the-counter, there's sparse analyst coverage.

BYD Selling Cars Worldwide, Ex-U.S.

The company has its eye on international expansion. Already, it sells cars in Europe, the Middle East and Latin America. In addition to China, it has manufacturing operations in India, Brazil and the U.S.

BYD has no plans to sell passenger vehicles in the U.S. anytime soon, but it is mulling the construction of a battery plant.

The company currently sells electric buses, manufactured at its Lancaster, California plant, in the U.S. 

BYD's three-year sales growth rate is 65%, and its three-year earnings growth rate is 114%. 

In comparison, Tesla's sales have grown at a rate of 47% during this time, while earnings grew by 116%. 

Tesla Leader Among Consumer Discretionaries

Tesla is among the S&P 500's biggest gainers in the past five days, advancing 5.55%. Among consumer discretionary stocks, Tesla is running behind only Nike Inc. NYSE: NKE over the past five days. 

Meanwhile, BYD shares are down 0.82% in the past five days and 11.15% in the past three months. The stock is forming a consolidation with a 25% correction from peak to trough, below a July 31 high of $36.27. As of October 6, that July peak was the current buy point. 

Investors remain bullish about Tesla, despite expecting 2023 earnings to decline by 19%, to $3.29 a share. Wall Street anticipates an earnings rebound next year to $4.59 a share, up 39%.

But no such decrease is forecast for BYD, which is expected to grow earnings at a rate of 55% this year and by another 34% in 2024. 

A big part of Tesla's expected 2023 earnings decline can be pinned on a rough first quarter, as price cuts, higher commodity input costs and factory underutilization all contributed to disappointing results. 

Tesla Slashing Prices Again

Analysts had expected Tesla deliveries to be strong in the current quarter, but already, there are signs of trouble brewing.

The company slashed the prices of some Model 3 and Model Y vehicles in the U.S. after reporting weaker-than-expected third-quarter deliveries. 

Take a look at the Tesla chart, set to a three-minute view, using bars or candlesticks. You can see the stock gapping down at the open on October 6 on news of those price cuts.

However, the stock rallied in the session's opening hours, rallying above the previous day's low, effectively closing the gap. 

Myster of the Cybertruck Launch

One development with the potential to bolster Tesla's shares is the launch of the Cybertruck. When that actually happens is anybody's guess, as the release has been pushed back since 2021.  

Tesla is manufacturing some Cybertrucks at its Austin, Texas, facility, but the launch and production plans are still shrouded in secrecy. 

The futuristic-looking Cybertruck, whenever it's launched, will be Tesla's first new passenger vehicle in three years since the Model Y's launch. While Tesla sells cars internationally, as of now, the Cybertruck appears likely to be available to North American customers.  

Tesla analyst ratings show a " hold " rating with a price target of $240.73, a downside of 7.25%.