BYD Accused of Cooking The Books & Faking Profitability (extremely BAD signs if true)

Financial Concerns

🚩 Q: What are the warning signs of BYD's potential financial trouble?
A: BYD is offering massive discounts of 10-30% on already affordable vehicles, with some models selling for as low as $10,000, and allegedly has a 12-month payment delay to suppliers.

💰 Q: How is BYD's automotive business reportedly staying afloat?
A: BYD's automotive business is allegedly being carried by their highly profitable battery cell supply business, which is not separately reported in their financials, making it difficult to determine the true profitability of their electric vehicle sales.

Competitive Disadvantages

🏭 Q: What disadvantage does BYD face compared to Tesla in terms of production?
A: BYD's complexity in their electric vehicle business, with many models and options, is a major disadvantage compared to Tesla's economies of scale and category killer approach, allowing Tesla to sell vehicles at two to three times the price of BYD's in China.

Financial Reporting Concerns

📊 Q: What allegations are made about BYD's financial reporting?
A: BYD is accused of faking profitability by lumping their battery cell supply business with their automotive business in financial reports, potentially hiding the true financial situation of their automotive division.

💸 Q: What are the estimated hidden costs for BYD's vehicle production?
A: According to Lelay's estimates, BYD has hidden costs of $20,000 per vehicle, which is higher than their estimated profit before overhead of $2,700 per vehicle, suggesting the automotive business is losing money on average.

Market Strategy

🔍 Q: How does BYD's market strategy differ from Tesla's?
A: BYD focuses on offering many models and options at lower prices, while Tesla employs a category killer approach with fewer models, achieving higher economies of scale and allowing for higher pricing.

Financial Concerns

🚩 BYD's massive discounts of 10-30% on already affordable vehicles priced around $10,000 in China signal potential financial trouble.

💰 The company's entire automotive business may be subsidized by its highly profitable battery cell supply division, which is not separately reported in financials.

Operational Challenges

🏭 BYD's enormous complexity with numerous vehicle models hinders achieving economies of scale comparable to Tesla's focused approach.

⏳ The alleged 12-month payment terms to suppliers, while portrayed as troubling, could be a prudent cash conservation strategy.

Profitability Questions

📊 BYD's battery cell supply business is likely highly profitable but not separately reported, obscuring the true profitability of EV sales.

❓ The video suggests BYD's automotive business may be unprofitable overall, with estimated hidden costs of $2,000 per vehicle.

• 00:00 🚨 BYD accused of cooking books, faking profitability, and covering up liquidity crisis with slowed production, rising inventory, and deep price cuts.
  • BYD has allegedly been selling cars at a loss, cooking the books to fake profitability and covering up a massive liquidity crisis, with signs including slowed production, rising inventory, and deep price cuts.
  • BYD is offering deep discounts of up to 35% on electric vehicles that originally started at around $10,000, suggesting they're having trouble selling them.
• 01:36 🚨 BYD accused of faking profitability, with electric vehicle business likely unprofitable and subsidized by battery cell supply business.
  • BYD is in big trouble.
  • BYD's electric vehicle business is likely unprofitable, subsidized by profits from its battery cell supply business, and is being outperformed by Tesla in China.
• 03:27 🚨 BYD accused of cooking books, faking profitability, and misrepresenting vehicles as electric or electrified, with electric vehicle business possibly unprofitable.
  • BYD is accused of misrepresenting their vehicles as electric or electrified by installing small batteries in internal combustion engine vehicles and labeling them as hybrids or new energy vehicles.
  • BYD's electric vehicle business appears to be unprofitable, relying on its battery cell supply business to stay afloat due to excessive complexity and lack of economies of scale.
• 04:57 📉 BYD accused of cooking books and faking profitability amid concerns over financial reports and delayed supplier payments.
  • The speaker encourages viewers to watch live streams by Lay about BYD and shares some reporting on the topic.
  • BYD's financial reports show high profitability with a 32.9% year-over-year net profit growth in 2024, but concerns arise due to the company's notorious history of delayed supplier payments.
• 07:14 🚨 BYD accused of cooking the books by combining unprofitable automotive business with highly profitable battery cell supply business to obscure financial performance.
  • BYD's business has 21 different vehicles and complexity, with half likely failing, and supposedly only 5% net margins and profit across their entire business, not just automotive.
  • BYD's "automobiles and related products" category may be used to obscure financial performance by combining vehicle sales with its highly profitable battery cell supply business.
  • BYD may be hiding losses in its automotive business by combining it with its highly profitable battery cell supply business under the category "automobiles and related products".
• 09:28 📉 BYD accused of faking profitability with suspiciously high estimated profit per vehicle, sparking concerns of "cooking the books".
  • BYD's profitability appears to be suspiciously high, with an estimated profit of $2,700 per vehicle after costs and taxes, sparking concerns of "cooking the books".
  • BYD's estimated profit before overhead per vehicle sold is approximately 500 yuan loss, suggesting the company may not be making money selling electric vehicles on average.
• 11:35 🚨 BYD accused of cooking the books, potentially hiding financial issues by distracting with breakthroughs and new products.
  • The speaker questions BYD's financials, suggesting possible book-cooking or trouble due to large discounts, complexity, and slow supplier payments.
  • If BYD was cooking the books, it would likely distract from financial issues by announcing breakthroughs and new products to maintain a positive image and access to capital.

WatchUrl: https://www.youtube.com/watch?v=8LJWzuZ6OrI