"Tesla's biggest competitor is likely to come from Chinese companies," musk put forward in an interview with the US media earlier. Although Musk did not clearly indicate who Tesla's biggest competitor is, based on the performance of the domestic new energy vehicle market at this stage, BYD's threat to Tesla seems to be the largest among many new energy vehicle companies.
However, in terms of "making money" ability, BYD is quite different from Tesla. According to the first quarter financial report data released by Tesla recently, Tesla's total revenue in the first quarter was 18.756 billion US dollars (about 121.6 billion yuan), of which the total revenue from the automobile business was 16.861 billion US dollars (about 109.4 billion yuan), an increase of 87% year-on-year; the net profit attributable to shareholders was 3.318 billion US dollars (about 21.5 billion yuan), a record record, an increase of 658% over the same period last year.
Like Tesla, BYD's performance in the first quarter of 2022 also maintained a rapid growth momentum. According to the financial report, BYD achieved operating income of 66.825 billion yuan in the quarter, an increase of 63.02% year-on-year; net profit attributable to shareholders of listed companies reached 808 million yuan, an increase of 240.59% year-on-year.
BYD's profitability needs to be strengthened?
Judging from the financial report data of the above two car companies, BYD's operating income and net profit in the first quarter were not as good as Tesla's. Specifically, BYD's operating income is about 55% of Tesla's, and its net profit is 3.75% of Tesla's. It should be noted that this situation is not only happening today, but has been around since 2021.
According to the data, Tesla's profit in 2021 reached 5.644 billion US dollars (about 35.967 billion yuan). On a quarterly basis, Tesla's profitability in the Q1-Q4 quarter of 2021 was 2.957 billion yuan, 7.507 billion yuan, 10.568 billion yuan and 14.931 billion yuan, respectively. In contrast, BYD's total profit for all businesses for the whole year was only 3.045 billion yuan. It can be seen from this that the profitability between BYD and Tesla is very large.
Of course, the 2021 annual report released by BYD is not limited to the automotive business, but includes its three main businesses - first, automobiles, automotive-related products and other products, accounting for 52%; second, mobile phone components, assembly and other products, turnover accounted for 40%; third, secondary rechargeable batteries and photovoltaics, turnover accounted for 7.6%.
Among them, the gross profit of the mobile phone parts, assembly and other products business, which accounts for up to 40%, has fallen from 11.19% in 2020 to 7.57% in 2021, and the profitability of Q1 in 2022 is not optimistic. In other words, bydir's 2022 Q1 financial report is able to achieve a substantial increase in net profit, mainly depending on BYD's automotive business.
However, from the current stage of the situation, BYD's profitability in the automotive sector is still a big gap with Tesla. According to the data, Tesla's auto business gross profit margin in the first quarter was as high as 32.9%, 310048 new cars were delivered, and the profit of single vehicles was as high as 10,700 US dollars (about 70,000 yuan). Among them, Tesla Model 3 and Model Y models accounted for 95% of deliveries, that is, 295324 units. In contrast, BYD sold 284737 units in the first quarter, with a net profit of only 480 yuan to 1510 yuan and a gross profit margin of 15.6%.
It should be noted that the gross profit margin of BYD's automobile business is not only lower than that of Tesla, but even lower than the gross profit margin (20%) of new power car companies such as Weilai Automobile and Ideal Automobile. In this regard, many people will be curious, BYD ming entered the automotive field for a longer time, and has a DM-i super hybrid system, blade battery, e platform 3.0 and other "trump cards" in hand, why is the gross profit margin still so low?
BYD just to "make friends"?
In fact, BYD's weak profitability is an old problem. Although BYD is favored by the market, it has been criticized by many investors because it has been deeply affected by the strange circle of "increasing income without increasing profits" for a long time. So why is BYD's profitability weaker than that of Tesla, Weilai Automobile, Ideal Automobile and other new energy vehicle companies? Brother Cylinder will analyze it with everyone next:
First, the pricing strategy is aggressive, and the generalization of product parts is low. I remember that in 2021, brother Cylinder had discussed that the average price of BYD bicycles was higher than the average price of Volkswagen. At that time, many readers left a message to the cylinder brother in the background, saying that using the average selling price of hybrid models and pure electric models to carry out with traditional joint venture brand fuel vehicles seemed to be somewhat victorious.
It is undeniable that BYD's way is indeed a bit "not talking about martial arts", but it is worth affirming that BYD's operation has changed the situation of the past joint venture brand dominating the new energy vehicle market - oil-electric hybrid is about 20,000 yuan more expensive than traditional fuel models, and plug-in hybrid models are about 80,000 yuan more expensive.
To some extent, BYD's pricing strategy does expand its market share in the market quickly in a short period of time, but it also lays hidden dangers - BYD's aggressive pricing strategy has directly led to the difficulty of increasing the profits of its own products.
The reason why Tesla has been able to achieve such a high net profit is directly related to the high universal rate between products. As we all know, tesla currently sells only two models, namely Model 3 and Model Y, and the parts of the two models are more than 70%, which means that Tesla can greatly reduce the cost of mold design, production and other aspects. Different from Tesla, BYD not only has the problem of more products and relatively low universal rate of parts, but also the same model of the BYD Dynasty series is also divided into DM-i and EV versions, which undoubtedly further increases the cost.
It is worth mentioning that Tesla has a strong control over the production cost of the vehicle body. For example, Tesla has issued a patent: through the one-piece casting machine, the Model Y body is reduced from 70 parts to 1, which greatly reduces the cost of production, assembly and time of all parts.
Second, insufficient production capacity, lack of high-end products. As far as the current situation is concerned, BYD's lack of production capacity has always been one of the shackles that make it difficult to achieve high net profits. Judging from the above data, BYD's sales in the first quarter were 10,000 units less than Tesla's, ranking second in the world. However, BYD delivered 100,000 units in March, leading Tesla in sales of 40,000 units. The reason for such a clear contrast is mainly due to the impact of the epidemic on BYD's Xi'an plant in January and February, which led to a sharp decline in production capacity.
It is worth mentioning that BYD will sell 730,000 vehicles in 2021, and the Xi'an plant will produce 400,000 vehicles. It can be said that the importance of the Xi'an factory to BYD far exceeds that of Tesla's Shanghai Gigafactory to Tesla. Considering BYD's current 400,000 orders and the rate of sales growth this year, BYD expects to sell between 1.6 million and 1.8 million units this year. There is no doubt that the production capacity problem is one of the problems facing BYD at present, if the capacity problem is solved, it will not only ensure the stable delivery of products, but also contribute to the improvement of net profit.
Earlier, an investor close to BYD revealed that "Wang Chuanfu is looking at the factory everywhere, hoping to acquire some production lines and quickly expand production capacity." In fact, BYD has spent a lot of money on expanding production capacity in the past 2021. According to the 2021 financial report, the capital expenditure of BYD's battery and photovoltaic business in 2021 was 23.9 billion yuan, and the capital expenditure of the automobile business was 22 billion yuan, and the expenditure of the two was 36.8 billion yuan more than in 2020.
From the current situation, three of the eight major factories planned by BYD have been put into operation, and five will be put into operation in 2022, with a planned annual production capacity of 3-3.5 million vehicles. For comparison, tesla has had six factories worldwide since the start of construction at its Austin, Texas plant in early April, including four complete vehicles, two batteries, charging piles, and the sun. According to the information released by Tesla, it is expected that the subsequent production capacity will reach 1.9 million to 2.7 million vehicles.
In other words, BYD's construction costs in the factory directly affect BYD's profitability at this stage, but this situation will change with the completion of BYD's factories. In fact, BYD is difficult to achieve high net profits, and the key lies in its lack of truly high-end models. At present, BYD's most expensive model is bydy Han Qianshancui Limited Edition, which costs less than 330,000 yuan.
Combined with BYD's current product matrix, most of the products of BYD Dynasty series and Ocean series are concentrated in 100,000-250,000 yuan. Compared with WEILAI Automobile, Ideal Automobile and other dynamics of more than 300,000 yuan, BYD still lacks corresponding high-end products in the price range of more than 300,000 yuan. Therefore, entering the high-end market will become the "only way" for BYD's next development. After all, entering the high-end market can not only enhance profits, but also the key to the upward movement of the brand.
Third, the industrial chain competition, BYD has still not made efforts. Morgan Stanley has released a report that the global electric vehicle winners will be those companies that can guarantee the supply of key raw materials. BYD and Tesla have adopted a full-chain integration strategy in this regard, and from upstream raw materials to batteries and chips, they will be produced by themselves.
As we all know, since 2021, the key metal raw materials related to power batteries, such as lithium, nickel, and cobalt, have increased in price significantly. Among them, the market quotation of battery-grade lithium carbonate rose nearly 10 times year-on-year, and the increase of nickel and cobalt in the same period also nearly doubled. Although BYD has adjusted the price of its products twice, the price adjustment range has always been difficult to compare with the soaring cost.
BYD's price increase is 3000-6000 yuan, and the increased models include BYD Han EV/DM series, Tang EV/DM-i series and so on. Tesla's price increase is 10,000-20,000 yuan, and the increase in models includes the Model Y long-endurance version. Combined with the price increase of raw materials, compared with Tesla's price increase, BYD's price increase is difficult to match the cost increase.
Fourth, the degree of intelligence needs to be improved. In addition to the above reasons why Tesla has been able to achieve such high profits, the sales of Full Self-Driving (FSD suite) and the subscription business have also brought Tesla considerable profits. According to the data, Tesla achieved operating income of $3.8 billion in services and other businesses in 2021, including self-driving software. However, BYD lacks software revenue, which also makes BYD's profitability gap with Tesla.
It is undeniable that BYD has deep self-research achievements in intelligence, taking intelligent assisted driving as an example, BYD Intelligent NetworkIng Center launched the DiPilot advanced intelligent driver assistance system in 2020, followed by the release of the automotive operating system BYD OS in September 2021. The two products have now been put on the BYD flagship model Han, but from the feedback from consumers and evaluation agencies, BYD Han still has many flaws in assisted driving and application. Compared with Tesla, although BYD occupies certain advantages in electrification and other aspects, it is slightly inferior in terms of intelligence.
Can BYD become the "Almighty King"?
In the above, all the reasons why BYD's profitability is weaker than Tesla's, BYD has long been optimizing and changing in a targeted manner. Remember that in September 2021, BYD Chairman Wang Chuanfu said that the first half of the revolution in the automobile industry is intelligent. After a long-term focus on electrification, since stepping into 2022, BYD seems to be interested in making up for the shortcomings in intelligence, especially in the field of automatic driving.
For example, in terms of autonomous driving software, BYD chose Baidu as an intelligent driving supplier. It is understood that in February this year, Baidu was exposed to provide BYD with an ANP intelligent driving product and a man-machine co-driving map, and Baidu's intelligent driving team has entered the field to cooperate with BYD for development. There is no doubt that baidu Apollo's automatic driving software strength is beyond doubt, but combined with the previous cooperation between Apollo and WM Motors, although it can bring some resistance to car companies in the early stage, with the news that Baidu restricts WM's self-developed intelligent driving business, WM Motors has fallen into a trough. Therefore, Brother Cylinder has always believed that full-stack self-research is the main technical route for BYD's future development.
In addition to strengthening intelligence, BYD is also imperative in terms of high-end. Judging from bydd's recent actions, it has mainly made two preparations: on the one hand, relying on the Denza brand, it will launch a variety of products with a price range of 300,000-500,000 yuan this year and next year; on the other hand, it will build its own high-end brand, with a price range of 500,000-1 million yuan. To tell the truth, with the current technical strength of BYD, it can be said that it is easy to cut into the product range of more than 300,000 yuan, but if you want to make a breakthrough of more than 500,000 yuan, you need to work from many aspects such as brand accumulation and service.
summary
I have to admit that Tesla's layout is indeed ahead of most of the current new force car companies, and even many traditional car companies, but in the competition with BYD, although Tesla currently occupies the "highland" of intelligence, from the perspective of long-term development, Tesla has disadvantages such as the lack of product matrix. In contrast, BYD, after the re-integration of its products and technologies, the successive production of factories, and the gradual improvement of the industrial chain, its subsequent growth rate may show geometric growth. It should be noted that BYD also has a "trump card" - e platform 3.0 has not yet been used, so we will look forward to the subsequent competition between the two sides.