Cathie Wood Sees Tesla’s Superiority in Technologically-Enabled Innovation Driving Lower Costs, Which Charlie Munger Doesn't Understand

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Cathie Wood sees Tesla's superiority thanks to lower costs associated with technologically-enabled innovation. She thinks this is something that Wall Street and Charlie Munger, who believe BYD is in a stronger position, do not understand.

Recently, Charlie Munger appeared on CNBC, where he criticized Tesla and praised BYD. He said he was investing in the latter because Tesla cut the price of its products in China twice last year, while BYD increased its prices. In his opinion, this 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 a big plus.

“That's easy, Tesla last year reduced its prices in China twice while BYD increased its prices. BYD is so ahead of Tesla in China it's almost ridiculous. If you count all the manufacturing space BYD has in China to make cars, it would amount to a big percentage of all 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 do not understand that the lower costs associated with 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 many on Wall Street do not understand that passing along the lower costs associated with 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 many on Wall Street do not understand that passing along the lower costs associated with 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 does not make sense when you look at the facts. An analysis of the sales results of both manufacturers, and most importantly, the margins per car sold, shows how much Tesla is ahead of BYD, and Wood's statement is correct.

In 2022, BYD sold 911,140 pure electric vehicles, compared to 1.314 million vehicles delivered by Tesla in the same period. Thus, the Texas company had a clear advantage here. If we add the sales of plug-in hybrids, which 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.

However, besides the quantity, a more important indicator is the profit per car sold. Tesla's profit per vehicle was $9,400 between April and December, according to data released by the Nikkei. BYD only received $1,454 for each car sold, which is significantly less and makes it almost impossible for the company to maneuver with pricing.

© 2023, Eva Fox | Tesmanian. All rights reserved.

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