BYD challenges Tesla with strong sales, poised to surpass in EV volumes, buoying Tesla stock.
Tesla and its stock are facing a new challenge as China-based electric vehicle (EV) manufacturer BYD (HK:1211) is reportedly on track to surpass Tesla (NASDAQ:TSLA) in sales volumes for the fourth quarter.
This development is fueled by BYD’s aggressive marketing strategies, including various promotions and discounts aimed at achieving their ambitious sales goal of 3 million units for 2023. Consequently, BYD’s shares listed in Hong Kong have appreciated by approximately 11% since the beginning of the year. Financial analysts remain optimistic about BYD’s future, predicting a significant increase in the company’s stock value.
BYD’s Impressive Sales Trajectory
BYD’s dynamic marketing efforts have paid off, as evidenced by the sale of 63,900 vehicles in the week of December 18 to 24, marking a 24% increase from the previous week, according to CarNewsChina.com. From January to November, BYD’s sales have reached over 2.683 million vehicles, a 65% increase compared to the same period last year. The company is now close to achieving its annual target, needing to sell an additional 320,000 units.
The company’s growth is also bolstered by its expanding international footprint. In November alone, BYD sold 30,629 new energy vehicles (NEVs) in markets outside China. Facing fierce competition at home and macroeconomic uncertainties in China affecting EV sales, BYD is focusing on international expansion. The company currently operates in 58 markets globally and plans to extend its reach even further.
BYD is not only excelling in sales but also in profitability. In the third quarter, the company’s net profit soared by 82%, reaching 10.41 billion yuan. Despite competitive pricing and a highly competitive market, BYD’s automotive business saw a 4% increase in gross margin to 25.7%.
Future Prospects and Stock Recommendations
Analysts are showing strong confidence in BYD’s stock. On December 6, Macquarie analyst Allen Yuan initiated coverage with a Buy rating and a HK$310 price target. JPMorgan’s Nick Lai and Jefferies’ Johnson Wan also maintained Buy ratings, with price targets of HK$270 and HK$331, respectively.
The general consensus among Wall Street analysts is a Strong Buy for BYD stock, with seven Buys against just one Hold. The average price target stands at HK$324.49, suggesting a 58.1% potential upside.
Conclusion
BYD, having consolidated its position in the domestic market, is now aggressively expanding internationally, posing a significant challenge to Tesla’s market leadership. With strong analyst backing and a positive outlook for the stock, BYD is set to make substantial gains over the next year.
