Move over BYD: Tesla may top Toyota’s operating profit

Tesla rival and Chinese automaker BYD saw a significant jump in deliveries in November, and while the company could threaten Tesla’s crown for the world’s largest electric vehicle manufacturer, some argue that another metric matters far more. Analysts predict Tesla’s operating profit to surpass global leader Toyota, which could represent another industry-wide disruption from the U.S. automaker.  

Toyota has a higher operating profit than any other auto company, and the Japanese automaker is expected to earn $20.1 billion in operating profit in 2022, according to Barron’s. Comparatively, some Wall Street estimates place Tesla’s operating profit at $22.6 billion for next year, which would likely be enough to surpass Toyota — especially if electric vehicle trends continue upward.

EV production volume will remain under the close watch of analysts and investors alike, but most consider profits to be a more important indicator of stock performance. Some analysts predict Tesla’s operating profit to increase by about 55 percent in year over year in 2023.

Most expect the Warren Buffett-backed BYD to sell roughly $84 billion worth of EVs in 2023, but it’s only expected to earn an operating profit of $4.8 billion, with a free cash flow of $5.1 billion. Wall Street estimates put Tesla’s 2023 total sales around $120 billion, while its free cash flow is forecasted to reach $14.1 billion.

BYD delivered 113,915 EVs in November, representing an increase of 147 percent year over year from its 46,137 units delivered in the same month last year. The automaker also delivered 116,027 plugin hybrid EVs in November.

Above: Tesla's only challenger is Chinese EV giant BYD, says former Tesla board member Steve Westly. Video: CNBC / YouTube

While BYD has delivered nearly 800,000 EVs in year-to-date in 2022, Tesla had already reached roughly 929,000 EVs by the end of September. Tesla doesn’t report its deliveries on a monthly basis, making estimates difficult, but it’s ahead going into the end of 2022.

Some analysts expect Tesla to deliver around 1.4 million EVs in 2023, while BYD is predicted to deliver roughly 915,000 EVs next year. However, BYD has also said it’s hoping to sell two million EVs in 2023, and while the target is ambitious, it wouldn’t be out of the question for the company to surpass Tesla.

To be sure, these estimates will be fully dependent on the industry-wide race to produce EVs, which Tesla has a solid lead on. In addition, Tesla has a grip on this year’s sales, though increased competition is expected to make that lead smaller.


Source: Barron’s