EV jolt: Bernstein says BYD should be closer in inventory to Tesla

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Bernstein assigned an Outperform rating to BYD Company Limited (BYDDF) on Monday and stressed that the valuation gap between the two stocks should not be too wide.

“Tesla and BYD are currently the two largest EV manufacturers, and are now comparable in size in terms of volume, revenue, and profit dollars, but BYD is growing faster,” analyst Toni Sacconaghi noted. Its 2024 forecast is that Tesla ( TSLA ) will generate before interest and taxes $ 8.7B on $ 114B of revenue, compared to estimates BYD ( BYDDF ) to collect earnings of $ 7.1B on $ 112B of revenue However, Tesla ( TSLA) was currently worth $750B versus BYD Company’s (BYDDF) of $90B.

“We believe that the investment theory that Tesla has a structural cost and scale advantage seems to be more implausible, and is more applicable to BYD… We believe that in the long term, valuation is important, and based on fundamental value valuation is more likely. to unite rather than diverge.”

Sacconaghi also said that the argument that Tesla (TSLA) is more than a car company holds no water as BYD’s battery energy storage business is currently larger in scale than Tesla’s (TSLA). BYD turns out to have similar “side bets” to investors like Tesla ( TSLA ) in batteries, semiconductor chips, and mobile components and connectors.

Last week, BYD (BYDDF) announced that it had reached a historic milestone after the company’s 6 millionth new car rolled off the production line at its Zhengzhou factory. China’s electric car maker has said it has been expanding its presence around the world, introducing new electric buses and taxis to electrify public transport. “With a decade of dedicated efforts, BYD’s electric public transportation solutions are now operating in more than 400 cities in more than 70 countries,” the company pointed out.

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Bernstein reiterated an Outperform rating on BYD Company Limited (OTCPK:BYDDF) on Monday, and stressed that the valuation gap between its two stocks should not be too wide.

“Tesla and BYD are currently the two leading EV manufacturers, and they are now comparable in size in terms of volume, revenue, and profit dollars, but BYD is growing faster,” analyst Toni Sacconaghi noted. His 2024 forecast is for Tesla (TSLA) to generate before interest and taxes of $8.7B on $114B of revenue, compared to BYD’s estimate (OTCPK: I WILL) to earn $7.1B in revenue on $112B in revenue However, Tesla (TSLA) has a market value of $749B versus BYD Company (OTCPK: I WILL) current valuation of $87B.

Sacconaghi also said that the argument that Tesla (TSLA) is more than a car company doesn’t hold water at all since BYD’s (OTCPK:BYDDF) battery energy storage business is currently bigger than Tesla’s (TSLA). BYD was also found to have similar “side bets” to investors like Tesla ( TSLA ) in batteries, semiconductor chips, and mobile components and connectors.

Last week, BYD (OTCPK:BYDDF) announced that it had reached a historic milestone after the company’s 6 millionth new energy vehicle rolled off the production line at its Zhengzhou factory. China’s electric car maker has said it has been expanding its presence around the world, introducing new electric buses and taxis to electrify public transport. “With a decade of dedicated efforts, BYD’s electric public transportation solutions are now operating in more than 400 cities in more than 70 countries,” the company pointed out.

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