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• Tesla Knocked Off First Place?! 🥇

Tesla Knocked Off First Place?! 🥇

You might know Tesla as the top dog. Head Huncho. The face of electric vehicles.

So who could knock them off their pedestal?

Well, In Q3 ‘24, BYD just pulled a power move & did what no one expected: they out-earned Tesla for the first time ever in revenue.

Let’s take a look under the hood at how it happened & why I think there’s still juice in the BYD battery yet.💥🔋

BYD's Big Win Over Tesla – Here’s What Went Down

- Revenue Flex 💰: BYD's Q3 revenue hit RMB 201 billion (that’s ~$27B USD), outpacing Tesla. That’s because they’re able to pump out loads of budget-friendly EVs that the masses are eating up.

- Profit Per Car? Meh, Could Be Better 🤷‍♂️: They made a record profit of RMB 11.6 billion this quarter. That breaks down to around RMB 9,300 (about $1,270) profit per car – which is down 18% year-over-year & just missed the analyst target. Not ideal but not a disaster. Why? They’re making up for it with sheer volume & sexy new models. Car models. Get your mind out the gutter.

🚗 BYD's Secret Sauce: Affordable, Value-Driven EVs🚗

BYD’s lineup focuses on budget-friendly rides that give people a solid EV without draining their wallets. And in a market like China, where the budget-conscious buyer is king, it’s a perfect strategy.

BYD’s products, like the DM-i 5.0 plug-in hybrid, are killing it. These hybrids are priced right, efficient, & bring in a pretty juicy margin (with gross profit per car up 17% quarter-over-quarter).

You know you’re on to something great when Tesla are taking some inspiration from it. They’re also looking to go a bit more budget friendly with future models. Copying BYD’s success playbook? Maybe….

Government Backing – BYD’s Secret Weapon

China’s government always makes investors anxious because you don’t know what they’re going to do next. That’s why you’ll find a lot of great value in Chinese stocks if you can stomach the volatility & give the CCP the benefit of the doubt.

But for EV’s? They’re laying out the red carpet.

In July, they doubled EV subsidies, so drivers can get up to RMB 20k off an EV. So what does that mean for BYD?

A whole bunch of those government subsidies are going straight in their pockets.

Drivers are looking at BYD’s affordable models & saying, “Another RMD 20K off? I’ll take it!” 

The whole time this policy is in play, BYD will keep crushing the revenue numbers in their domestic markets.

New Models Driving Demand – The Fangchengbao Flex 🔥

If you needed another reason to add them to your portfolio cue the Fangchengbao.

It’s their brand new off-road SUV & it isn’t just rugged. It luxury meets off-roading.

And they’re sticking to the theme of great value & high volume by cutting the price by RMB 50k,

Demand went crazy & now it's selling over 6k units a month. 🤯 

The next model, Bao8, is already hyped up with Huawei’s ADAS 3.0 (fancy driver-assist tech) & if it’s sales perform anything similar revenue will be looking healthy from just these two lines.

October Record-Breakers – BYD’s Sales Surge Continues📈

- October Record Sales: Domestic sales hit another all-time high, pushing past 400k units. Wholesale volume? Over 500k. BYD’s got serious momentum.

- Top Models on the Rise: BYD’s Song PHEV is flying off the lot. Newer models like the Denza Z9GT & Sea Lion 07 are keeping that growth hot. And get this: Denza Z9GT racked up 5k orders in 36 hours – people can’t get enough. When a company has products that fit in a market this well I have to give them a spot in my portfolio.

Keeping Export Risks Low🌍

Trumps been back at it again. Elections are coming up & he’s been making noise about tariffs on Chinese imports & even Europe have been whispering about tariffs on Chinese EVs.

The good news?

Exports are only a tiny slice of their pie (high single digits in volume). Even if tariffs come in to play, BYD have got such a focus on fulfilling domestic demand I don’t think it will have a meaningful impact on the numbers they report.

BYD: A Stock That’s Got Room to Grow 📊

Now this is what really matters. Is there still money to be made? Do BYD still have room to grow?

The answer. Absolutely yes.

Right now, BYD’s trading at 16.5x its estimated 2025 earnings. Analysts are expecting 20% growth in revenue & earnings per share (EPS) which is more than reasonable.

For context, Tesla has traded as high at 70x it’s estimated 2025 earnings. That makes BYD over 4x cheaper than Tesla. Seems like a steal to me.

The Risks: China's Economic Hangover🤔

It all sounds wonderful, right? What could possibly go wrong?

Well, China’s economy isn’t exactly firing on all cylinders right now.

If the November 8 stimulus package doesn’t jumpstart spending, BYD could face some demand pressure.

Lower consumer spending could mean they have to lower prices, which might hit those already thin margins. But with that said, demand for BYD hasn’t looked exactly weak so far. Not even close.

For me, I’m happy to take the risk & back the CCP to get the Chinese economy moving again.

BYD is sitting in a prime spot with its affordable lineup, insane sales momentum, & a government that’s basically pushing EVs into every driver’s garage.

With October sales smashing records, plus new models rolling out, I think BYD is just getting started. I’m in. 💰️ 

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That’s all! See you same time next week 👋 

P.S Hit reply & let me know what you thought of this weeks newsletter. All feedback is welcomed ❤️