Electric car maker BYD is speeding ahead of Tesla with respect to profitability. The Chinese company today (April 28) reported a 632% jump in profits in the first quarter from a year ago. Days earlier, the US car company led by Elon Musk announced one of its worst quarters ever.
BYD is the world’s largest electric vehicle maker (membership), though its brand isn’t widely recognized outside of China. It started out as a battery maker about 25 years ago and transitioned into the car business a little more than a decade ago, making both conventional fossil fuel-powered cars and “new energy vehicles.” The success of its first mass-produced hybrid caught the attention of legendary US investor Warren Buffett, who in 2008 bought a 10% stake in BYD for $230 million. That investment seems to be really paying off right now.
There is increased demand for electric vehicles in China, BYD says, and it expects continued growth. The company’s profits rose to about 750 million yuan ($111 million) in the first quarter, compared to 102 million yuan a year ago. BYD sold 73,172 new energy vehicles (pdf) in the quarter, up 147% from the same period a year ago. Including conventional fuel cars, it sold 117,578 vehicles in the quarter, up 5% from last year. The company is now selling 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 continue to maintain strong growth,” the company’s latest stock exchange filing reports. According to Reuters, BYD expects to sell 655,000 cars in 2019, and will account for a substantial portion of the 1.6 million electric vehicle total that China’s Association of Automobile Manufacturers predicts will be sold this year.
In stark contrast to this positive news for BYD, its US rival Tesla lost nearly $700 million in the first quarter. It attributed over $120 million in losses to a higher return rate than expected after it raised prices for the Model S and Model X. In its quarterly earnings call, Tesla chief financial officer Zachary Kirkhorn described the first quarter as “one of the most complicated… in the history of the company.”
Beyond its faltering quarterly profits, Tesla also had some bad news in China to contend with recently. Last week, a video that circulated widely on Chinese social media showed a parked Tesla Model S abruptly caching fire in Shanghai, where the company plans to build its first overseas factory. Earlier in the month, a parked Tesla in the US also caught fire.
The two electric vehicle makers do have something in common, however. Tesla and BYD both plan to expand into each other’s markets. China is the world’s largest car market, and the US comes second.
Correction, April 28: BYD sold 73,172 NEVs in the first quarter. The article earlier said it sold 117,578 NEVs in the quarter.