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The electric car manufacturer BYD far exceeds Tesla in terms of profitability. The Chinese company announced today (April 28th) that its profits jumped 632% in the first quarter compared to a year ago. A few days earlier, the US auto company led by Elon Musk had announced one of its worst quarters.
BYD is the world's largest manufacturer of electric vehicles (members), although its brand is not widely recognized outside of China. It started as a battery manufacturer about 25 years ago and moved to the automotive sector a little over a decade ago. It manufactured both conventional fossil fuel and "new energy vehicles" cars. The success of its first hybrid production mass produced the attention of legendary American investor Warren Buffett, who acquired in 2008 a 10% stake in BYD for $ 230 million. This investment seems to be paying off right now.
According to BYD, the demand for electric vehicles is increasing in China and is forecasting continued growth. The company's profits reached about 750 million yuan ($ 111 million) in the first quarter, compared with 102 million yuan a year earlier. BYD sold 117,578 new energy vehicles during the quarter, up 5% from a year ago. The company now sells more electric vehicles than conventional cars.
"New energy vehicles are expected to continue to sell well in the second quarter, and new energy vehicle sales and revenues will continue to maintain strong growth," according to the company's latest stock market reports. According to Reuters, BYD plans to sell 655,000 cars in 2019, a substantial portion of the 1.6 million electric vehicles expected by the China Automobile Manufacturers Association this year.
Contrary to this good news for BYD, its American rival Tesla lost nearly 700 million dollars in the first quarter. He attributed more than $ 120 million in losses at a higher than expected rate of return after raising prices for the S and X models. In his quarterly earnings call, Tesla CFO Zachary Kirkhorn described the first quarter as "one of the most complicated … in the history of the company. "
Beyond its falling quarterly profits, Tesla has also had to deal with bad news in China. Last week, a widely distributed video on Chinese social networks showed a parked Tesla Model S that was suddenly hiding a fire in Shanghai, where the company plans to build its first factory abroad. Earlier in the month, a parked Tesla in the United States also caught fire.
The two manufacturers of electric vehicles, however, have something in common. Tesla and BYD both plan to expand into their respective markets. China is the largest automotive market in the world and the United States is second.
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