Elon Musk’s Tesla vs Warren Buffett’s Chinese BYD’s Who Will Dominate

BYD, a Chinese electric vehicle firm partly owned by Warren Buffett’s Berkshire Hathaway, became the world’s largest electric vehicle maker in the first half of 2022, overtaking Elon Musk’s EV giant Tesla. This shows the Chinese automaker’s resilience in the face of COVID-inflicted disruptions that plagued its rivals this year.

BYD sold 641,350 electric vehicles in the first half of 2018, compared to Tesla’s 564,743. BYD sales are rising faster than in the U.S. BYD sold 486,771 more cars in the first half of 2022 than in 2021, a 315 percent increase. Tesla sold 178,693 more cars in the first half of this year than last, a 46% increase.

The companies’ sales aren’t comparable. Many of the firm’s sales are plug-in hybrids with gasoline engines. Tesla sells electric automobiles solely. China considers both cars “zero-emission.”

BYD’s Hong Kong stock price has barely moved since the company announced sales numbers. Despite the U.S. bear market and China’s challenges, investors have remained bullish on BYD since the start of the year. The company’s stock price has climbed over 25% this year. At that time, Tesla‘s New York stock price fell 42%.

Berkshire Hathaway invested $232 million in the Chinese firm in 2008. Berkshire’s investment is now worth $7.7 billion.

Musk doubted BYD. Tesla’s CEO told Bloomberg News in 2011: “Have you seen their car?” He said, “Their product isn’t fantastic.”

Tesla ascribed its slow development to COVID-19 lockdowns in Shanghai that delayed operations at its gigafactory. “Many manufacturing days were lost. Many upstream suppliers also lost production time. ”

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Wedbush analyst Dan Ives estimates Tesla produced 70,000 fewer cars this year due to the Shanghai lockout. Musk predicted Tesla’s Shanghai facility would “come back with a fury” Telsa’s gigafactory resumed to full production in early June after two months of closure or decreased capacity.

Tesla’s rebound hasn’t matched BYD’s spring rise.

Citi analysts said in May that BYD was “resilient” to the Shanghai closure and supply chain disruption. BYD’s major production base is in Guangdong, which didn’t endure as harsh lockdowns as Shanghai.

Citi analysts said the firm’s supply chain is “vertically integrated,” meaning it makes more parts in-house and relies less on outside suppliers than its rivals, protecting it against supply chain interruptions. BYD’s supply chain success may transform rivals into clients. BYD aims to sell Tesla batteries “very soon,” its VP told Chinese reporters last month. Tesla hasn’t confirmed.

BYD’s immunity from the Shanghai lockdown helped it become the second-largest automaker in June. Only FAW-Volkswagen sells more cars every month. BYD was China’s seventh-largest automaker in January. Its recent tear has also withstood a government examination for potential pollution at its Changsha, China factory.

Bridget McCarthy, market research analyst and head of China operations at Boston-based Snow Bull Capital, said in a recent interview that BYD’s tenacity overshadowed the probe.

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