Electric cars: BYD Co. (OTCMKTS: BYDDF)

BYD Auto is the fourth largest plug-in electric vehicle (BEV and PHEV) company and fourth largest BEV company in the world, with 9.1% and 7% global market share respectively in 2021. 

The company has mainly based its sales in Mainland China, but is undertaking rapid expansion into the global market, with sales hitting over 100,000 per month in March 2022, and is expecting to sell between 1.5 million to 2 million plug-in EVs in 2022, around 3 to 4 times the volume in 2021, possibly overtaking current world leader Tesla.

• Sector(s): Consumer Cyclical
• Industry: Auto Manufacturers
• Local EV rivals: XPeng, Li Auto and Nio
• Full Time Employees: 224,280
• Founded in 1995 
• headquartered in Shenzhen, China
• https://www.byd.com

Warren Buffett's Berkshire Hathaway (BRKB) is a longtime investor.

Like Nio and Xpeng, BYD began selling EVs in Norway in late 2021, starting with the Tang SUV.

Notably, BYD is profitable, in sharp contrast to Li Auto, Nio and Xpeng Motors, though capital spending surged in 2021 to power the company's ongoing expansion.

Majority of its EVs and hybrids selling for $15,000-$34,000, though some vehicles top $40,000.

It's possible that BYD's EV-only sales will top Tesla sales by year-end.   BYD's sales are far above those of Nio, Li Auto and Xpeng, let alone U.S. EV startups Lucid and Rivian Automotive.

On April 3, BYD reported that March sales of new energy vehicles hit 104,878, up 333% vs. a year earlier and 88,283 in February.

The March total includes 104,338 passenger cars, virtually all in China. Of that, BYD sold 53,664 pure electric vehicles, up 229% from a year earlier. Plug-in hybrid sales skyrocketed 615% to 50,674.

BYD's hybrid sales have skyrocketed thanks to a new DM-i system that provides substantial battery range.

For the quarter, BYD sold 286,329 EV and hybrid vehicles. That is nearly equal to Tesla's all-electric deliveries.

BYD also is adding significant EV capacity.

The auto giant has signaled that it will conservatively sell 1.5 million new energy vehicles in 2022, or up to 2 million if supply issues ease. That's up from 2021's NEV sales of 593,745.

BYD has opened or will open three new factories in early 2022, boosting annual capacity by 500,000 vehicles. Local media reported that a new factory in Jiangxi province was set to begin mass production on April 15.

BYD EVs Big And Small

BYD has a slew of models, some with electric and hybrid versions such as the flagship BYD Han sedan. The automaker is rolling out several new EV and hybrid models in the next several months, along with notable revamps or longer ranges for key models.

Yuan Plus

BYD began China sales of the Yuan Plus in February, with a subsidized price starting below $21,000. The all-electric Yuan Plus has a range of 267 miles-317 miles under a very loose China standard. The compact SUV is BYD's second Ocean line EV using its e-platform 3.0, following the smaller Dolphin. The Yuan Plus also is kicking off an expansion into new export markets, notably Australia. The compact SUV has begun presales in Australia as the Atto 3. The Yuan Plus also will enter the Singapore market. 

BYD Dolphin

BYD Seal 

Among BYD's upcoming models is the Seal sedan. The Seal will be a Model 3 rival, but significantly cheaper. Unlike many Tesla rivals, when BYD launches a new model, it quickly produces in volume.

BYD Han

BYD on April 10 officially launched more-advanced hybrid versions of its BYD Han, with an electric-only range of up to 150 miles on a China standard. The flagship BYD Han already comes in all-electric and an older hybrid form. The all-electric Han also got a substantial upgrade, including a big increase in battery range. BYD said on April 10 that it received more than 48,000 order for the updated Han EV and hybrid models, which have been available for preorder since March 19.

 

BYD Tang
 BYD has sold the Tang in Norway since late 2021, but will sell the SUV and two other electric vehicles across much of Europe starting in the fourth quarter. (Business Wire)

 

BYD also is one of the biggest makers of electric buses, with plants in the U.S. and many other countries besides China. In late January, BYD unveiled a new, smaller school bus for the U.S. market with bus-to-grid charging abilities.

BYD has gotten a slew of bus orders recently in Europe, where diesel buses are being phased out. That could serve as a steppingstone for BYD's personal EV ambitions on the Continent.

BYD also makes EV delivery trucks, big rigs, garbage trucks and more. Anheuser Busch recently added an additional 20 BYD electric trucks to its California fleet. BYD signed a deal to deliver 200 Class 8 electric trucks in the U.S. for Sweden's Einride.

BYD makes buses, big rigs and other heavy vehicles for the U.S. market at its Lancaster, Calif., plant. Also at Lancaster, BYD will assemble the next generation of Nuro self-driving delivery vehicles, using many BYD parts, including Blade batteries.

Foreign sales: 40% of revenue comes from the international market

BYD's auto plants are in China, with virtually all its sales there. BYD easily tops Tesla in local China sales, even just in EVs.

Another upside is that BYD has a lot of markets to expand into. In late 2021 it began selling the Tang SUV in Norway, giving it a foothold for a much-larger expansion across Europe.

It is shipping various EVs and hybrids to Latin America, launching its BYD Han in Brazil.

BYD officially launched Yuan Plus presales in Australia, branded as the Atto 3 for the local market, on Feb. 19. Atto 3 deliveries are set to begin in July. BYD's Dolphin and Seal will enter the Australian market, perhaps with the Atto 2 and Atto 4 names, BYD's importer says. The Dolphin could launch by year-end, with the Seal in Q2 2023.

BYD's low to moderately priced vehicles could serve rich and developing nations, while Tesla's current and planned vehicles are clearly aimed at affluent customers in rich nations. But America isn't in BYD's sights for now. Tariffs on China-made autos make exports to the U.S. cost prohibitive.

House passes Inflation Reduction Act

President Biden is expected to sign it in the coming days

• Revenue Raised: 1) 15% Corporate Minimum Tax & companies will be allowed to deduct depreciated assets. 2) Medicare negotiation of prescription drugs. 3) IRS Tax Enforcement. 4) 1% Excise tax on stock buybacks starting January 2023.
• Spending: Energy Security and Climate Change: $369 billion. Affordable Care Act Extension: $64 billion.
• Total Deficit Reduction: Approximately $300 billion.
• The bill will allow Medicare to negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025.
• The bill will invest in solar, wind, hydrogen, nuclear, oil, and gas.
• The bill includes extension of $7500 tax credit for EV purchases. The tax credit will be limited to cars priced at $55,000 or lower and trucks and SUVs priced at $80,000 or lower.
• The bill will require that tens of millions of acres of land be allocated for oil and gas production in order to offer wind and solar leases on Federal land and other locations.
• Private equity was exempted from 15% corporate minimum tax.  
• The Senate Parliamentarian said that provision that capped prices of prescription drugs in private market violated Senate rules and it was removed. The provision for Medicare negotiation was allowed to stay in.
• Congressional Budget Office said Inflation Reduction Act would "would have a negligible effect on inflation" in 2022; inflation would probably be between 0.1 percentage point lower and 0.1 percentage point higher in FY23.

Energy Stocks: XOM, CVX, BP, SHEL, OXY, COP, XLE, USO, DVN.

EV Stocks: TSLA, GM, F, HMC, TM, VWAGY, STLA, RIDE, LCID, FSR, CHPT, BLNK, EVGO. RIVN.

Solar Stocks: TAN, FSLR, SPWR, CSIQ.

Healthcare Stocks: UNH, HUM, CNC, MOH, CI, ANTM, THC, UHS, CYH, HCA, MRK, PFE, LLY, TEVA, GILD.

Nuclear Power Stocks: CCJ, UUUU, UEC, DNN, FLR

Private Equity: CG

Gold miners : high dividend yield

•  Gold miners now have the highest dividend yield in almost a decade.

Natural gas -- Dutch TTF

Natural gas trades at different prices in different parts of the world. There are three global benchmarks for natural gas, at hubs in the U.S., Europe and Asia. In Europe, the hub is in the Netherlands and the futures contract is known as Dutch TTF. In Asia, it’s the Japan Korea Marker, or JKM. In the U.S., gas trades at the Henry Hub in Louisiana.

Crude oil, by comparison, has been traded globally for decades, and prices around the world have converged more than natural-gas prices.  U.S. oil, in the form of the benchmark West Texas Intermediate (WTI) crude price, trades slightly below the global price, which is tracked by Brent crude futures, a product originally based on oil from Europe’s North Sea.

  

Dutch TTF natural gas, the European reference price, reached $166.72 on Tuesday, moving past the post-invasion high of over $154. Dutch TTF is calculated based on the price of liquefied natural gas, which is shipped by tanker around the world. Prices in the U.S., based on the cost of gas delivered by pipelines within the country, are significantly lower.

Supplies of gas to Europe from Russia are at seasonal lows because flows to the Dutch trader GasTerra and the renewable-energy company Orsted have been cut in response to their refusal to pay for gas in rubles, Citi strategists said. Russia’s Gazprom has stopped supplying gas to both companies because they refused to make their payments in the Russian currency at the end of May.

Electric cars : News

In 2020, Europe replaced China as the biggest market of EVs. Europe registered over 1.4 million new electric cars in 2020, followed by China with 1.2 million. Overall, global electric car sales rose in 2020, despite the pandemic-related restrictions. In the U.S., consumers spent over $120 billion on electric car purchases in 2020, presenting a 50% growth from 2019.

• Aug 2022: Lucid Group introduced Sapphire, Lucid's new ultra-high-performance brand, led by the new Lucid Air Sapphire - the world's first fully electric luxury super-sports sedan.
• 5 Apr 2022: Rivian Automotive (RIVN) produced 2,553 vehicles and delivered 1,227 during Q1; believes to be well-positioned to meet 25,000 annual production guidance.
• 28 Feb 2022: Lucid Motors USA (LCID) signs agreements for a full production factory in Saudi Arabia. The agreements are expected to accelerate Saudi Arabia's strategic goal to transform and diversify its economy through the development of sustainable energy and transportation. Lucid estimates that the location of Lucid's first international manufacturing plant in the Kingdom of Saudi Arabia may result in up to $3.4 billion of value to Lucid over 15 years, and the facility will enable Lucid to address growing demand for Lucid's products.
• 28 Dec 2021: Kandi Technologies (KNDI) announced that its wholly owned subsidiary Jiangxi Province Huiyi New Energy Co. Ltd entered mass production of its lithium iron phosphate battery.
• 28 Sept 2021: Ford Motor (F) to invest $11.4 bln to develop electric vehicle campuses, creating 11K new jobs.  Ford is announcing plans to bring electric vehicles at scale to American customers with two new massive, environmentally and technologically advanced campuses in Tennessee and Kentucky that will produce the next generation of electric F-Series trucks and the batteries to power future electric Ford and Lincoln vehicles.
• 22 Sept 2021: Ford Motor (F) and startup Redwood Materials said on Wednesday they are partnering to form a "closed loop" or circular supply chain for electric vehicle batteries, from raw materials to recycling.
• 16 Sept 2021:  Ford Motor (F) begins pre-production of all-electric F-150 Lightning truck. Ford confirmed construction of the Rouge Electric Vehicle Center a year ago as part of an initial $700 million investment in the historic Ford Rouge Center, creating a manufacturing home for the F-150 Lightning. Now Ford's pre-production F-150 Lightning trucks are leaving the factory for real-world testing, with the truck available to customers next spring.
• 1 Sep 2021: Xpeng (XPEV) reports August deliveries increased 172% yr/yr.  In August, XPeng delivered 7,214 Smart EVs, representing a 172% increase year-over-year. Deliveries in August consisted of 6,165 P7s, the Company's sports smart sedan, and 1,049 G3s, its smart compact SUV.  2021 year-to-date deliveries reached 45,992 vehicles, representing a 334% increase year-over-year. P7 deliveries continued to strengthen, achieving a record month in August and a 209% increase year-over-year.
• 1 Sep 2021:  NIO reports August deliveries increased 48.3% yr/yr. NIO delivered 5,880 vehicles in August 2021, representing a 48.3% year-over-year growth. While the Company's new order reached an all-time high in August driven by the increasing demand, the vehicle production, especially the manufacturing of the ES6 and EC6, was materially disrupted by supply chain constraints resulting from the COVID-19 pandemic in certain areas in China and Malaysia. The deliveries consisted of 1,738 ES8s, the Company's six-seater or seven-seater flagship premium smart electric SUV, 2,342 ES6s, the Company's five-seater high-performance premium smart electric SUV, and 1,800 EC6s, the Company's five-seater premium smart electric coupe SUV. As of August 31, 2021, cumulative deliveries of the ES8, ES6 and EC6 reached 131,408 vehicles.
• 1 Sep 2021:  Li Auto (LI) reports August deliveries increased 248% yr/yr. Co announced that the Company delivered 9,433 Li ONEs in August 2021, increasing 248.0% year over year and 9.8% month over month, breaking the Company's monthly delivery record again. Total deliveries in the first eight months of 2021 and cumulative deliveries of Li ONEs reached 48,176 and 81,773 respectively.
• 5 Aug 2021: Ford Motor (F) confirms that it expects to be well positioned to have fully electric vehicles account for 40 to 50% of its US sales by 2030.
• 15 July 2021: The EU unveiled plans to effectively ban the sale of new gasoline-powered cars by 2035.
• July 2021: Chinese companies posted record sales of electric cars. Li Auto Inc. (NASDAQ: LI) sold over 8,589 cars in July, showing a 251% year-over-year growth. Similarly, XPeng Inc. (NYSE: XPEV) also managed to deliver more than 8,000 cars in the same month.
• 17 May 2021: Canoo (GOEV) opened its reservations and is taking preorders: Starting today, the lifestyle vehicle, MPDV and pickup truck can be reserved in the United States, with a $100 deposit per vehicle at www.canoo.com/reservations. The Lifestyle Vehicle will be the first vehicle to market in 2022, and has targeted pricing starting from $34,750 -$49,950i for Delivery, Base and Premium models, before incentives, or optional equipment. Deliveries for the Pickup Truck and scaled production for MPDV are scheduled to begin as early as 2023.
• 15 May 2021: Ford (F) hosts an event to reveal the all-electric F-150 Lightning. The automaker says the F-150 Lightning will bring stunning innovation, technologies and capabilities to the popular F-Series, without sacrificing power, payload and towing capability. Production of the F-150 Lightning begins next spring at the company's Ford Rouge Electric Vehicle Center.
• 26 Jan 2021: CarParts.com (PRTS)  Announced its launch of a new dedicated shopping hub for the hybrid, plug-in hybrid, and electric vehicle community; the hub will also feature news, guides, blog content, and maintenance insight for the community.
• Dec 2020, Tesla: Despite the impact of the pandemic, Tesla produced and delivered half a million EVs in 2020. It ended the year by finally getting included in the S&P 500 Index after five profitable quarters. Deliveries of Model Y that is being produced in Shanghai's Gigafactory are expected to begin shortly. Tesla Cybertruck, Semi, and Roadster are due to be launched this year. Tesla's revenue increased 45.3 percent to $8.77 billion in Q3 2020. Its non-GAAP net income increased 155.5 percent YoY to $874 million, while its EPS rose 105.4% from last year's $0.76. 
• 19 Nov 2020: General Motors (GM) announced more aggressive plans to pivot toward electric cars as it accelerates efforts to challenge Tesla (TSLA). GM stock rose. The No. 1 U.S. automaker now plans to spend $27 billion on electric cars and autonomous vehicles through 2025, up from a prior target of $20 billion. Also by 2025, GM plans to launch 30 electric cars around the world, with two-thirds of them available in the U.S. Previously, it planned at least 20 new models by 2023.
• The Lyriq, Cadillac's first all-electric vehicle, which will arrive in Q1 2022, nine months ahead of its prior schedule.
• 19 Nov 2020: GM will develop two electric cars for Honda (HMC) using the Ultium platform and anticipates others will want to license the new proprietary battery technology. The Ultium will allow electric cars to go 400 miles on a single charge, GM has said. That would top Tesla's projected range of 322 miles for its Model 3 sedan.
• 16 Nov 2020: Lordstown Motors (RIDE) released updates on commercial, operational, and strategic developments; as a highlight among those updates, co indicated that it remains on track to begin production of its full-size, all-electric pickup truck, the Lordstown Endurance, in September 2021, with full production ramping through 2022. Co has received approx. 50,000 non-binding production reservations from commercial fleets for the Lordstown Endurance.
• 2 Nov 2020: NIO reports October deliveries increased 100% yr/yr. NIO delivered 5,055 vehicles in October 2020, a new monthly record representing a strong 100.1% year-over-year growth. The deliveries consisted of 2,695 ES6s, the Company's 5-seater high-performance premium smart electric SUV, 1,477 ES8s, the Company's 6-seater and 7-seater flagship premium smart electric SUV, and 883 EC6s, the Company's 5-seater premium electric coupe SUV. NIO delivered 31,430 vehicles in 2020 in total, representing an increase of 111.4% year-over-year. As of October 31, 2020, cumulative deliveries of the ES8, ES6 and EC6 reached 63,343 vehicles.
• 2 Nov 2020: Li Auto (LI) reports deliveries of 3,692 Li ONEs in October, representing a steady increase compared to September.
• 2 Nov 2020: Xpeng Inc (XPEV) reports October deliveries increased 229% yr/yr to 3040 vehicles. XPeng delivered a total of 3,040 Smart EVs in October 2020, consisting of 2,104 P7s, the Company's smart sports sedan, and 936 G3s, its smart compact SUV. The Company's October deliveries represented a 229% increase year-over-year. As of October 31, 2020, year-to-date deliveries of the Company's Smart EVs reached 17,117 units, representing a 64% increase year-over-year.
• 10/26/20: DiamondPeak Holdings Corp (DPHC) completes business combination with Lordstown Motors; starts trading on the Nasdaq under ticker symbol "RIDE".
• 10/10/20: Renault (OTC:RNSDF) is expected to unveil a new electric SUV concept alongside the production version of the Dacia Spring next week. The French automaker is charging in late with a strong electrification push.
• August 2020: The Lucid Air is slated to be revealed on Sept. 9, 2020. Lucid expects to achieve a driving range of about 500 miles per charge.
• August 2020: The Nikkei Asian Review reported that Panasonic (6752.Japan) will invest another $100 million in its joint-venture Tesla (TSLA) Gigafactory in Nevada. The report says plant capacity will rise about 10%, to 39 gigawatt-hours year.  A 39 gigawatt-hour a year plant can make 39,000,000 kilowatt-hours of batteries, or enough to power 400,000 to 500,000 EVs.
• August 2020: Nikola (NKLA) is designing a pickup truck called Badger to get 600 miles of range through a combination of a battery pack and a hydrogen fuel cell to power its electric motors. It’s a little like having a portable generator on board.

• When trying to compare the efficiency of battery power versus gasoline engines, the discussion around miles per gallon gets a little strange. The EPA is the entity converting values for U.S. drivers, and the agency decided that about 34 kilowatt-hours of energy is the same as a gallon of gas. So an EV that goes 100 miles using 34 kWh gets about 100 miles per gallon.
• June 2020: Volkswagen (OTCPK:VWAGY) is scheduled to start taking binding orders for its "first edition" ID.3 electric car at a list price of €40K ($45.5K). The German automaker expects to start making some European deliveries in September and sending out full-featured ID.3s by the end of the year as the company's broad goal to be a mass EV producer accelerates. EV buzz is picking up in general after Tesla (NASDAQ:TSLA) crossed the $1,000 per share threshold and Nikola (NASDAQ:NKLA) soared in its public debut. Investors also have been putting a charge into EV-related stocks like Electrameccanica Vehicles (NASDAQ:SOLO), Arcimoto (NASDAQ:FUV), Workhorse Group (NASDAQ:WKHS), Kandi Technologies (NASDAQ:KNDI) and Nio (NYSE:NIO), Aptiv (NYSE:APTV), Delphi Technologies (NYSE:DLPH) and to name a few. Of course, chipmakers like Nvidia (NASDAQ:NVDA), Maxim Integrated Products (NASDAQ:MXIM), NXP Semiconductors (NASDAQ:NXPI) and TE Connectivity (NYSE:TEL) also benefit from the increased focus on EVs.
• September 2019: Michigan-based Rivian Automotive landed an order from Amazon to purchase as many as 100,000 electric delivery vans over the next decade, with the first ones showing up on the road in 2021.
• Jan 7, 2019 Shanghai:  Tesla (TSLA) broke ground on its Chinese Gigafactory where it plans to mass-produce Model 3 and Model Y electric vehicles. "We think with the resources here we can build the Shanghai Gigafactory in record time and we’re looking forward to hopefully having some initial production of the Model 3 towards the end of this year and achieving volume production next year," Elon Musk stated at the event. The local Gigafactory is the first wholly-owned car plant in China operated by a foreign company. 
• Jan 2018: Tesla (TSLA) has started to roll out its all-electric Model 3 vehicles, while Volvo last year announced plans to phase out gas-only cars and launch new electric and hybrid vehicles in 2019.
• Dec 2017:  Panasonic is considering jointly developing batteries for electric vehicles with Toyota (NYSE:TM), a move that would cement its position as the world's leading producer of automotive batteries. Panasonic (OTCPK:PCRFF) already supplies lithium-ion assemblies for Toyota's hybrid vehicles, but has also carved out a name for itself as the major battery supplier to Tesla (TSLA).
• July 2017:  Toyota (NYSE:TM) is working on an electric car with improved driving range and a fast-charging battery. The Japanese automaker is expected to build the new EV on a new platform and use solid-state batteries that can be recharged in minutes. The new model could arrive as early as 2022.  Other automakers such as BMW are also working on developing all-solid-state batteries, eyeing mass production in the next 10 years.
• March 2015:  Mercedes is launching its first plug-in hybrid-electric midsize sedan, the C350e, in U.S. dealerships in September 2015, according to reports. Chatter on the street suggests that the German auto-making powerhouse plans to deeply undercut Tesla stickers, with a price around $42,000 before $5,250 worth of federal and state incentives. The 85 kWh Tesla starts at twice that level. And the brash young automaker will not have a competitive product until at least 2017. Mercedes can undercut the pricing because it has a lot more experience at mass production and sourcing; will make the car in low-cost Alabama instead of high-cost California; and it can subsidize the vehicle with its other vehicles, just to gain market share. The market for electrics is growing dramatically; this is just the start.

Shipping rates retreat from their peak

Supply chain issues have created more demand for exports and driven shipping rates, ultimately reflected in how much a shopper pays for a given good. But those rates are starting to retreat from their peak.

Shipping rate for a 40 foot container from Shanghai to Los Angeles -- a route that Chinese exports are often taken through when sent to US consumers. 

In one way, this is the silver lining of inventory build ups seen across retailers -- there's less demand for more product, which in some ways insulates from shipping congestion and supply chain issues. But it's also helpful to break down inflation as pre-war contributors (shipping rates, demand resurgence) and post-war drivers (oil prices, grains export bans). To see this move in shipping rates could instill some optimism that those pressures are indeed easing. 

Market update: Federal Reserve hikes short-term rates by 0.75% (15 June 22)

S&P 500 after the Fed's 75-basis point rate hike yesterday, which was the largest move in 28 years.

Several central banks elsewhere also raising their key rates:  the Swiss National Bank surprised overnight with a 50-basis point rate hike (its first hike in 15 years), Brazil's central bank raised its key lending rate by 50 basis points, and the Bank of England increased its key lending rate by 25 basis points while projecting a 0.3% decline in Q2 GDP as a whole.