Tesla has started to slip. At least, this is true for the shares of the electric car pioneer. Over a period of three months, the NASDAQ stock has lost more than a quarter of its value. In the same period, BYD's share price has risen by 42%. Elon Musk's activity could be one reason for the enormous discrepancy between the two e-mobility stocks. The CEO of Tesla may have scared off investors, not least with his billion-dollar takeover of the short message service Twitter - Wall Street is worried that Musk could finance this deal by selling Tesla shares. Meanwhile, rival BYD is making headlines, especially operationally. Earlier this month, the company reported strong production and sales figures: From January to May 2022, BYD sold more than half a million electric vehicles (electric cars and hybrids). Their passenger car sales increased by almost 350% compared to last year's period.
Vehicle manufacturing - the group also supplies buses and trains - is the largest of three segments for the company, which was founded in 1995. In 2003, BYD committed itself to e-mobility, true to its namesake motto "Build your dreams." Last year, the car division contributed slightly more than half of total sales. The second largest pillar is the electronics segment. Here, the Shenzhen-based company supplied components and high-tech materials to manufacturers of smartphones and other mobile devices. 7.3% of group sales in 2021 were attributable to the batteries and photovoltaics business (see chart). BYD describes itself as one of the world's leading producers of rechargeable batteries. Customers for its batteries include leading consumer electronics manufacturers such as Samsung and Dell. With its "Blade Battery", BYD is now also pushing into the car segment. According to the Chinese, the battery, which is equipped with lithium iron phosphate (LFP) cells, is particularly safe, powerful and durable. The technology is seen as a cheaper alternative to the lithium-ion cells that dominate Western markets.
Apparently, such arguments are well received by Tesla - the Texans could soon install the "Blade Battery" in their models. Lian Yubo, executive vice president of BYD, made an announcement to that effect in an interview with Chinese state broadcaster CGTN. "We are now good friends with Elon Musk because we are preparing to supply batteries to Tesla very soon," the top executive said. So far, the U.S. industry giant has been exclusively using LFP batteries made by Chinese manufacturer CATL. Since 2020, the corresponding batteries have been assembled at the Shanghai plant. According to Tesla, just under half of all vehicles received LFP energy storage in the first quarter of 2022. The battery innovation could be one reason why analysts expect strong growth at BYD. On average, they expect earnings per share of CNY 2.47 in 2022, which would represent a 133% increase in profit over the previous period. By 2024, the ratio is expected to rise to CNY 5.63.
BYD also shows strong values as an underlying for new softcallable barrier reverse convertibles. As a single-underlying, the Hong Kong-listed share in the product currency CHF makes it possible to pay a guaranteed coupon of 12% p.a.. Those wishing to invest in USD can expect a fixed quarterly payout of 15% p.a.. Uniformly, the barrier is set at 59% of the initial level. The coupon rises to 26% p.a. when the BRC is based on Tesla shares in addition to BYD. In the case of the multi-product, the barrier is fixed at 55% of the high price. The following applies to all variants: As soon as a share uses up the cushion or touches or falls below the respective threshold, the partial protection expires. Please also note: Due to the softcallable function, early termination and redemption of these issues may occur.
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