Image: Tesla
Cathie Wood sees Tesla’s superiority due to lower costs related to technologically-enabled innovation. She thinks that is something that Wall Street and Charlie Munger, who consider BYD is in a stronger position, don’t understand.
Recently, Charlie Munger appeared on CNBC, where he criticized Tesla and praised BYD. He said he was investing within the latter because Tesla cut the value of its products in China twice last yr, while BYD increased its prices. In his opinion, that is an indicator that demonstrates the strength of the Chinese manufacturer. Munger laughed that BYD was way ahead of Tesla. He also believes that BYD’s large production space is an enormous plus.
“That is easy, Tesla last yr reduced its prices in China twice while BYD increased its prices. BYD is so ahead of Tesla in China it’s almost ridiculous. In the event you count all of the manufacturing space BYD has in China to make cars, it will amount to an enormous percentage of all of the land in Manhattan Island,” said Munger.
Tesla bull, Cathie Wood of Ark Invest commented on a Munger interview video shared by @SawyerMerritt/Twitter. She explained that Wall Street and Munger don’t understand that the lower costs related to technologically-enabled innovation, which in Tesla’s case is batteries and drivetrains, will cause a boom in unit demand, discrediting the Keynesian/Fed’s Phillips Curve model.
“Charlie Munger and lots of on Wall Street don’t understand that passing along the lower costs related to technologically-enabled innovation, in #Tesla’s case batteries and drivetrains, will cause a boom in unit demand, discrediting the Keynesian/Fed’s Phillips Curve model,” Wrote Wood.
Charlie Munger and lots of on Wall Street don’t understand that passing along the lower costs related to technologically-enabled innovation, in #Tesla’s case batteries and drivetrains, will cause a boom in unit demand, discrediting the Keynesian/Fed’s Phillips Curve model. https://t.co/IVzo39aHE2
— Cathie Wood (@CathieDWood) February 18, 2023
Obviously, Munger’s statement doesn’t make sense if you take a look at the facts. An evaluation of the sales results of each manufacturers, and most significantly, the margins per automotive sold, shows how much Tesla is ahead of BYD, and Wood’s statement is correct.
In 2022, BYD sold 911,140 pure electric vehicles, in comparison with 1.314 million vehicles delivered by Tesla in the identical period. Thus, the Texas company had a transparent advantage here. If we add the sales of plug-in hybrids, that are big polluters, BYD’s sales in 2022 were 1.86 million vehicles. Most of BYD’s sales are in China, with only a small portion coming from overseas sales.
Nonetheless, besides the amount, a more necessary indicator is the profit per automotive sold. Tesla’s profit per vehicle was $9,400 between April and December, based on data released by the Nikkei. BYD only received $1,454 for every automotive sold, which is significantly less and makes it almost not possible for the corporate to maneuver with pricing.
© 2023, Eva Fox | Tesmanian. All rights reserved.
_____________________________
We appreciate your readership! Please share your thoughts within the comment section below.