Warren Buffett’s BYD vs. Elon Musk’s Tesla

Back in 2004, Elon Musk became the largest shareholder and chairman of Tesla. Later in 2008, Warren Buffett invested $232 million for a nearly 10% stake in BYD, a China-based company that makes lithium-ion batteries and electric cars. Truth be told, Warren Buffett and Elon Musk have been competing in the EV space for quite some time now. 

Above: Both Warren Buffett and Elon Musk have made the cover of Fortune magazine for their electric vehicle pursuits (Source: Fortune)

So how did their respective bets in EV space turn out? Not bad. According to Investor's Business Daily, "Tesla and BYD are both fast-growing EV giants... [both] are setting the pace. Both have huge expansion plans." Tesla stock and BYD stock were winners in 2021, but which is a better bet now?

"Tesla is the world's largest electric vehicle maker, delivering 308,600 electric vehicles in the fourth quarter, up from 241,300 in Q3, 201,250 in Q2 and 184,800 in Q1. But BYD is catching up. BYD sold 93,945 new energy vehicles in December, up 218% vs. a year earlier," reports Ed Carson at IBD.

Furthermore, "Both Tesla and BYD have managed to grow rapidly despite chip shortages that have crippled almost every other automaker in 2021... [and] both will continue expanding rapidly. Tesla will soon open plants near Austin, Texas and Berlin, Germany, and is looking to expand its Shanghai facility yet again."

Meanwhile, "BYD says it'll open three new factories, boosting capacity by another 500,000 vehicles by Q2 2022. All that suggests that BYD's electric and hybrid production could hit 1.5 million or more."

Above: A look at at how BYD's higher-priced Han compares with its competitor, the Tesla Model 3 (YouTube: Gogo Chang)

There are some differences though. "Tesla, targeting the luxury and affordable luxury markets, has far-higher selling prices than BYD," notes Carson. But, BYD's lower-cost EVs and hybrids are selling for between for $15,000-$34,000. That said, BYD is now trying to offer higher-priced EVs like the Han (see above) which tops out at about $40,000.

These automakers target different markets though. "Tesla is a truly global EV giant, with major sales in North America, Europe and China... [meanwhile] BYD's auto plants are in China, with virtually all its sales [are] there."

Both companies make their own chips and energy storage products. But BYD also has a strong business selling electric buses and EV batteries. In fact, according to Carson, "There has been repeated but unconfirmed speculation that Tesla Shanghai will use BYD batteries starting in 2022."

From an investor standpoint, according to IBD's Carson, "Growth prospects are still strong for these EV leaders. Tesla stock and BYD stock were among the biggest EV winners in 2021... TSLA stock is in better shape right now, while BYD stock is consolidating, but investors should keep their eyes on both."

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Source: Investor's Business Daily