BYD nears Tesla gross profit margin as it launches cheap Seagull mass market EV
The world's second largest maker of electric vehicles keeps stepping on Tesla's toes, competing for rental car fleets and individual buyers alike. With a more diverse fleet of electric vehicles and its own blade battery technology, BYD is perhaps Tesla's most formidable direct competitor, as Elon Musk acknowledged not long ago.
It is also expanding in niches where Tesla doesn't have a presence just yet, like that of affordable compact EVs for the mass market, a portfolio gap that won't be filled by Tesla before the eventual launch of the Model 2 next year. BYD just launched its first truly affordable electric car for the mass user - the Seagull - whose top model costs the equivalent of less than US$14,000 and yet can cover more than 200 miles on a charge.
Powered by BYD's own blade battery structural pack housing cells with LFP chemistry, like the base Tesla Model 3 or Model Y, the Seagull has reportedly been the star of the Shanghai Auto Show that closed this week. This says a lot in an automotive expo dominated by EV launches instead of gas-powered cars, where performance electric vehicles like NIO's new ET7 made their debut.
The Seagull got 10,000 preorders in a 24-hour span when its presales opened, indicating that it will be a hugely popular model for BYD. The company where Warren Buffett invested way back in 2008, just reported a record 400% year-on-year profit growth. BYD made about US$600 million in the first quarter, riding on the wings of its so-called New Energy Vehicle sales, which include battery-powered cars and plug-in hybrids.
BYD's profit margin of 17.86% for this past quarter is actually nearing Tesla's gross margin of 19.3% in the same January-March period, a feat that would've been unthinkable just last year. Tesla started an EV price war, however, which was the main reason for a profit margin estimate miss that sent its shares down after the earnings report.
BYD, despite logging slightly lower profit margin than in the banner for EVs Q4, reported a rather stable outlook and an aggressive forecast that may see it beat Tesla in electric car sales numbers this year, especially if the Seagull continues to sell like this.