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In the comment thread for our article “BYD Shocks — Is Winning the EV Revolution,” Larry Evans added some very interesting and useful perspective. Because of how things stood a few years ago, some people claim that BYD’s got a really low gross margin whereas Tesla has a very high gross margin. A lot has changed since 2019, or 2021, or even 2023. But there’s much more here than a brief note on gross margin. Larry writes:
“BYD’s automotive gross margin for the latest reported [quarter] was 25.6%. Tesla’s automotive gross margin, excluding regulatory credits, was 13.58% for the latest reported quarter.
“BYD was a battery and electronics company that started making cars. Starting as a supplier, they are far more vertically integrated by nature and did not ‘copy Tesla.’
“Also, BYD started out small and has consistently turned a profit. It reinvested almost all of what it earned to grow the business, particularly in R&D. Tesla raised massive amounts of capital to fuel a money-losing business for the majority of its existence. When it eventually turned a profit, it tended to sit on more of the cash, rather than spending it to grow the business.
“Almost 2/3 of the global EV market is China. Almost 3/4 is China and ROW [rest of world]. BYD is the largest player in China and has been taking over ROW, as the largest EV brand in Singapore, Philippines, Colombia, Israel, Thailand, Brasil…
“And BYD just overtook Tesla in the UK for January. It will not take ‘decades’ in markets that allow them to compete.”
Good points, Larry! Good points.
More BYD stories that might interest you:
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