Tesla vs. BYD: What's the Better Buy?
Key Points
BYD is now the largest electric vehicle seller in the world.
Tesla is shifting its focus from just car manufacturing to AI and software development.
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BYD (OTC: BYDDY) and Tesla (NASDAQ: TSLA) are two of the most important companies in the electric vehicle (EV) industry globally. If you had to choose one to invest in today, which is the better buy-and-hold option?
Tesla wants to make more than cars
Despite slowing sales, Tesla has a widespread charging network and the most recognizable electric vehicle brand in the world. Tesla is making a push to transform from a carmaker to a broader innovative company specializing in autonomous driving, artificial intelligence (AI), and software.
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The upside is less about electric vehicles and more about Tesla becoming a fully integrated tech company. The company's stock has remained relatively flat over the past 12 months, but it is still trading at an absurdly high price-to-earnings ratio of over 300.
BYD is the world's top EV maker
BYD, on the other hand, is now the world's largest electric vehicle seller. It is expanding rapidly on nearly every continent. BYD has an advantage in that it controls its entire battery and semiconductor supply chain. BYD produces EVs at lower prices than competitors, which gives it an affordability edge over more luxurious EV car manufacturers, such as Tesla.
BYD and Tesla are both facing increasing competition. BYD's latest earnings report showed a 32.6% decrease in profit year over year. BYD reduced its sales target for 2025 by 16%, but it still expects to double the amount of EV and hybrid cars it exports. BYD trades at a much more reasonable price than Tesla and is up 5.6% as of Dec. 17.
While both companies are successful in their own right, BYD currently offers more global momentum and lower execution risk than Tesla. Both companies face intense competition, but BYD remains a more compelling buy.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has a disclosure policy.
