Buffett-Backed BYD Trounces Tesla as China Economy Reopens
While shares of Tesla Inc. are melting down lately on demand concerns, Chinese rival BYD Co. is on a tear as investors applaud its record sales year and widening footprint in the world's biggest electric vehicle market.
The US-listed shares of Warren Buffett-backed BYD have gained 8.5% over the past month versus a 40% slump for Tesla. They've also beaten a gauge of global EV makers, which has fallen 12%, and outperformed domestic peers Li Auto Inc. and Nio Inc.
Investors view BYD as a bellwether for China's EV sector and say the firm is poised to become a key beneficiary as the nation reopens its economy. While that's a boon for all carmakers, BYD is well placed because it's taking market share, has better pricing power and controls much of its supply chain, producing its own chips and batteries, bulls say.
“We do like BYD's vertical integration, built over many years, which many are now trying to attain,” said Kevin Net, portfolio manager at Edmond de Rothschild Asset Management in Paris. “And of course the added bonus of China reopening this year.”
Last year was a tough one for EV makers globally. Rising interest rates and higher inflation hurt demand. Supply chain snags and increased competition also hit the bottom line. For BYD in particular, shares fell 27%, with losses accelerating after Buffett's Berkshire Hathaway Inc., a long-term backer, pared some of its stake.
Still, BYD appears to have overcome many of those obstacles. Its production and sales volumes of new-energy vehicles tripled in a year despite the nation's Covid Zero policy sparking sporadic and protracted citywide lockdowns.
Analysts are taking note. BYD has garnered the second-most buy-equivalent recommendations among global automakers with market values
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