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How do Tesla & BYD's Finances fare against their competitors in the Auto industry?

Updated: Feb 18

Disclaimer: This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Readers are solely responsible for their own investment decisions.

 


Key- observations:

  1. Legacy Automakers are in huge amount of Debt.

    1. they are mostly in Net Debt position.

  2. Mercedes has the highest Gross Profit Margin at 22%

  3. Tesla has the highest Net Profit Margin at 15%

    1. where most of the other players have average of 5%

  4. Toyota has the highest amount of Cash, Income & Operating Cash Flow

  5. Volkswagen generates the highest amount of Revenue

  6. BYD has the highest Revenue growth at 71%


Hypothesis:

  1. Since Tesla has one of the highest Profit Margin, they can afford to reduce the average selling prices of their vehicles to capture more market share.

  2. If Legacy Automakers (whose majority of Revenue still coming from I.C.E vehicles) do not innovate fast enough to catch up to the EV market, they may be in an even more difficult financial position due to the high amount of Debt they have, and also their already existing low Profit Margins.

    1. Excessive debt can restrict a company's ability to invest in future growth opportunities, they face higher interest payments, making them more vulnerable to economic downturns or rising rates.

  3. From a financial performance standpoint, BYD is the closest runner up from Tesla. If they can continue to maintain their high Revenue Growth and increase their profitability at the expense of Tesla, they may overtake Tesla's position.


BYD Seal & Tesla Model 3
BYD Seal & Tesla Model 3

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