BYD's record financial results - fast charging and even faster growth

Imagine that by the time you finish reading this article, your electric car will be fully charged and ready to comfortably travel from Brussels to Paris. It may sound like science fiction, but that is exactly what Chinese electric vehicle giant BYD has done, revolutionizing the speed of electric vehicle charging and redefining the competitive landscape of the global automotive market.

Jacob Falkencrone, Chief Investment Strategist at Sax asks whether this groundbreaking innovation means BYD is poised to overtake Tesla, and what that could mean for investors looking to participate in the electric vehicle revolution? Let’s take a quick journey through BYD’s extraordinary rise and explore what the future holds.

In a nutshell:

• BYD is gaining global momentum, delivering record profits, rapidly expanding its international presence and outperforming Tesla on the stock market.
• Innovation drives corporate advantage, from ultra-fast five-minute charging to a diverse range of vehicles, including hybrids and clean technology solutions that go beyond cars.
• Risks still exist, including pressure on margins resulting from intense price competition and regulatory barriers in global markets, but BYD's growth story is hard to ignore.

BYD's electrifying results: earnings acceleration and revenue growth

BYD recently reported its best-ever financial results, with fourth-quarter profits rising an impressive 73% to a record $2,1 billion on the back of strong vehicle sales. Revenue for the same period rose 53% to $38 billion, pushing the company’s full-year 2024 revenue past the significant $107 billion mark, surpassing Tesla’s $97,7 billion.

While the results were good, Jacob Falkencrone notes that higher government subsidies made up a significant portion of BYD’s overall profit. Additionally, administrative costs and taxes rose significantly, raising some doubts among investors about the sustainability of future profitability levels. Nevertheless, the company remains financially strong, with a significantly improved cash position, indicating its solid financial health and ability to support future growth.

Loads faster than your morning coffee

The key to BYD’s recent success is a groundbreaking new battery charging technology that can deliver a range of 400 kilometers in just five minutes—about the time you’re spending reading this article. By comparison, the fastest chargers Tesla offer a range of about 275 kilometers in about 15 minutes. This is not an incremental improvement, but a revolutionary solution that directly translates into one of the biggest consumer problems related to electric vehicle adoption: long charging times.

Investors have taken notice of the developments. Reflecting the enthusiasm, Hong Kong-listed BYD shares have risen more than 50% this year, recently hitting record highs, far outperforming Tesla, whose shares are down about 31% year to date. The stock’s remarkable performance underscores investor excitement about BYD’s revolutionary technology and its potential to completely transform the electric vehicle landscape. Despite recent strong performance, the stock still appears attractively valued relative to historical valuation levels.

Strategic shift from price wars to profitability

In the past Chinese electric vehicle manufacturers, including BYD, have been waging aggressive price wars to quickly gain market share. But BYD is changing its strategy, moving away from relentless price cutting to a more sustainable model focused on innovation and technological superiority.

This turnaround signals a maturity that should reassure investors looking for sustainable profitability, not just sales growth. By positioning itself through innovation, not price alone, BYD is ensuring long-term market resilience and higher margins.

BYD vs Tesla: A Battle Beyond Cars

While BYD now outperforms Tesla in annual revenue, Tesla still enjoys a much higher market capitalization ($800 billion vs. BYD’s $157 billion). Investors remain impressed by Musk’s ambitious vision, particularly in artificial intelligence and robotics.

But Tesla’s dominance is increasingly being challenged. A recent slowdown in sales in key markets, particularly China and Europe, has exposed weaknesses stemming from outdated vehicle models and growing competition from rivals such as BYD. Additionally, Tesla’s brand image has faced headwinds in Europe and the United States, in part due to controversial statements by CEO Elon Musk and his political involvement, which has negatively affected consumer perceptions and may have contributed to weaker sales.

BYD's sales, meanwhile, rose to 4,27 million vehicles last year, making it the undisputed automotive leader in China, overtaking even global giants such as Volkswagen.

Crucially, BYD has a distinct advantage with its diversified strategy, offering both electric and plug-in hybrid vehicles. Strong demand for hybrids in China gives BYD added flexibility and resilience—something Tesla lacks given its pure-electric approach. BYD’s strategy is proving effective both at home and abroad, perfectly combining affordability, innovation and ambition as Tesla struggles with slowing momentum and growing competition.

- As consumers become more environmentally conscious, there is a growing interest in more sustainable transportation options, including electric vehicles. As a result, the electric vehicle market is becoming increasingly competitive with traditional car manufacturers. Including e-vehicle stocks in an investment portfolio can provide diversification benefits beyond the automotive industry, as electric vehicle companies operate in a separate sector from traditional fuel-powered car manufacturers. – says Marcin Ciechoński, responsible for the development of Saxo Bank in Poland.

Global ambitions

BYD is not only winning domestically, but is also fast becoming a major global player. Vehicle exports rose by almost 72% last year, and BYD recently raised almost 6 billion euros to accelerate its global expansion, opening new plants in Thailand, Uzbekistan and Brazil.

The aggressive expansion is being met with a positive response around the world: from the busy streets of Bangkok to the sprawling highways of Johannesburg, BYD vehicles are quickly gaining popularity. The combination of high-tech innovation and lower prices is appealing to global consumers, many of whom previously chose older brands from Europe, Japan or the United States.

Potential obstacles on the horizon

While BYD is clearly gaining momentum, investors need to be mindful of the potential challenges. The Chinese auto market continues to see intense competition, and the ongoing price war continues to put significant pressure on profits across the industry. While BYD has maintained profitability despite recent volatility, any escalation in price competition could begin to erode its financial advantage.

In addition, global expansion is never easy and poses significant challenges. Geopolitical risks pose a significant obstacle, particularly in the United States, where tariffs have prevented BYD from entering the passenger car market. In Europe, regulatory scrutiny over Chinese subsidies for electric vehicles could complicate expansion efforts. Moreover, international expansion will depend on BYD’s careful navigation of regulatory, consumer expectations and infrastructure constraints. Labor and environmental standards abroad have proven difficult to meet, especially as BYD faced a temporary construction halt at its Brazilian plant over labor standards violations. These issues underscore the potential risks associated with BYD’s international expansion.

Conclusions for investors

For investors, BYD represents an attractive opportunity fueled by strong growth, cutting-edge technology, and international ambition. With solid profitability, rapid innovation, and promising global expansion plans, BYD is undoubtedly one of the standout brands in the electric vehicle industry today. However, significant headwinds remain—notably in terms of profitability pressures, geopolitical tensions, and the complexity of overseas growth opportunities. As BYD continues to accelerate, investors face a critical question: Can the company maintain its current electrifying momentum, or is the road ahead likely to become even more rocky?

And now that you're done reading this article, your car is fully charged and ready to go from Brussels to Paris. Enjoy your trip!