Not sure if this was posted already, missed it when it came out last week:- https://www.cnbc.com/2023/02/15/charlie-munger-says-byd-is-far-ahead-of-tesla-in-china.html MARKETS Charlie Munger says BYD is so far ahead of Tesla in China ‘it’s almost ridiculous’ PUBLISHED WED, FEB 15 20234:22 PM ESTUPDATED WED, FEB 15 20235:58 PM EST Yun Li@YUNLI626 ZE594-CNUNCH TSLA+1.04 (+0.52%) Charlie Munger said Wednesday that Tesla pales in comparison to BYD in China, calling the Chinese electric vehicle maker his favorite stock ever. “I have never helped do anything at Berkshire [Hathaway] that was as good as BYD and I only did it once,” the 99-year-old investor said at the Daily Journal’s virtual annual meeting Wednesday. Berkshire initial investment is now “worth about $8 billion or maybe [$9 billion]. That’s a pretty good rate of return,” said Munger, Warren Buffett’s longtime investment partner. BYD has been a lucrative bet for Berkshire, which first bought about 220 million shares in September 2008. The stock has jumped more than 600% in the past 10 years amid the massive growth in electric vehicles. Berkshire has actually been trimming its BYD stake in the past year as the stock has become increasingly pricey. “At the current price of BYD stock, little BYD is worth more than the entire Mercedes corporation. It’s not a cheap stock, but on the other hand, it’s a very remarkable company,” Munger said. Munger, Berkshire’s vice chairman and a Daily Journal board member, credited Li Lu, founder of Seattle-based asset manager Himalaya Capital, for introducing him to BYD. Munger also said BYD CEO Wang Chuanfu is unusual, calling him a genius and a workaholic. Asked if he would prefer Tesla or BYD as an investment, Munger said the answer is easy. “Tesla last year reduced its prices in China twice. BYD increased its prices. We are direct competitors. BYD is so much ahead of Tesla in China ... it’s almost ridiculous,” Munger said. BYD recently said it expects record adjusted annual profit for 2022 of 16.3 billion yuan ($2.4 billion), about 1,200% above 2021. “BYD last year made more than $2 billion after taxes in the auto business in China. It’s incredible what’s happened,” Munger said. “If you count all the manufacturing space they have in China to make cars, it would amount to a big percentage of the Manhattan island, and nobody had ever heard of them a few years ago.” The longtime investor called Tesla CEO Elon Musk talented — and “peculiar.” He previously said what Musk achieved in the car business was a “minor miracle.” “I don’t buy him, and I don’t short him,” Munger said Wednesday.
I'm not sure why he compares the two, unless it's a given that Tesla is the standard to beat. In any case Tesla still makes more EVs than BYD and Tesla's profit margin is significantly higher. But competition is like democracy; choice is what drives improvements.
You so dislike Tesla that you'll go fishing for anything that may "demonstrate" whatever it is you hate. Now you take BYD, because clearly no other American car company is close to Tesla's performance. So let's clarify... BYD makes ICE, BEV and EV and they are quite popular. I occasionally see their EV (cabs) in Singapore and they look good. However it may pain you, in terms of pure EV numbers Tesla continues to outsell BYD, although probably not for long. Also, Tesla's profit margin on each car it sells is $9500, while BYDs is $1500, an unsurmountable difference. But again, the war today is between ICE and EV. The competition between EVs is good and healthy.
Tesla's margin as some sort of "production advantage" is a red herring, no matter how many graphic designers say, especially for the last two years with egregious middle man scalping. The genius of Musk isn't in manufacturing, it's in cutting out dealerships. For Q3, 2022, AutoNation (AN) reported a gross profit of $5,934 per new car sold at an average revenue of $51,541. That's an 11.5% gross profit margin on the sales of cars alone. Additionally, AutoNation averaged $2,755 in revenue from Finance and Insurance, which is additional earnings from sales that includes profits selling financing, maintenance contracts, warranties, and other items. Note that the F&I figure includes averages from the sale of used cars, which may or may not be higher. Regardless, we're discussing gross profits of more than $8,000 that have nothing to do with manufacturer gross margins. If the law didn't disallow manufacturers from selling vehicles directly to the consumer, dealer profits would be in the hands of manufacturers and would completely erase Tesla's gross margin advantage. Unfortunately, this isn't the case so despite skyrocketing vehicle prices, you can see that manufacturer margins have remained flat over the years as shown below. If you combine the gross margin of the dealers, many automakers would have greater margins than Tesla. Tesla's ownership of the retail and service network allowed it to claim the benefits of higher prices that dealers have been taking from traditional automakers. Now, of course, dealership profits do not belong to the automaker but they play a critical role in understanding why Tesla's price cuts can easily be matched.
You couldn't sell a tesla legally in Texas for the longest time thanks to their lobbying. I'm guessing that's now changed w/Musk moving in.
I remember that. Dealers have a lot of power over their manufacturers. Essentially the dealers have unionized so all the Chevy dealers negotiate with GM together. It will make it hard for GM to capture that margin.