The world’s two largest EV makers fight it out in the stock market. EV stocks are becoming more popular with investors; which ones should you consider?
The two companies fighting it out for supremacy are Tesla and BYD. These are the two largest electric vehicle automakers, which is kind of like having a China vs USA fight. Although these two top the charts in terms of sales, other companies contribute to the EV world in many ways. With that said, let’s see how Tesla and BYD go head-to-head in some markets and follow a similar path.
BYD sales led the way
BYD is a battery giant in China and one of the most prolific EV automakers in the country. In 2022, BYD raced ahead of Tesla for the sales lead in the Chinese market. During the first quarter of this year, Tesla cut production at its Shanghai plant, which signaled a slowing of the company in the area. This caused some EV stocks to drop or level off during the quarter. Of course, that’s not the whole story.
Although Tesla cut production, it is expected that this American electric vehicle brand will regain the sales crown after the first quarter of the year. BYD sales plunged in January and February because many customers were waiting for price cuts and new models to arrive.
Prices cut to jump-start the lineup
We’ve heard about Tesla cutting prices in America, but have other automakers done the same in other countries? BYD makes major price cuts in China across most of the lineup to entice customers to choose some new models. Tesla also cut prices in China and offered incentives in the market, but it has recently threatened to increase prices to make up for some of the lost revenue.
Is the Tesla software enough to take the lead?
When investors consider stocks, they often look at many factors. These two EV stocks have much in common, but one distinct difference is the Tesla driver-assist software. This system, called Full Self-Driving, is making progress and could be the catalyst required to push Tesla over the top.
Of course, another factor in the challenge between BYD and Tesla is that BYD is nearing the opening of its first passenger EV factory outside of China. Once this new factory is up and running, another will be close behind, and more should come soon after. BYD is trying to force its stock to bounce back after the price wars with Tesla.
How did each EV company perform last year?
Year-over-year progress is one method of measuring the predictability of EV stocks and how they could perform. Tesla beat its Chinese target by delivering 1.81 million vehicles, which was just over the target of 1.8 million. These strong sales in China help to push stocks to the desired level.
On the other side of the coin, BYD announced full-year sales of 3,012,906 vehicles, which was greater than the company target of three million. This shows that both companies were able to reach and exceed the desired sales goals during 2023.
Are new EVs in the works?
Tesla intends to build a new EV and utilize a new production process that could revolutionize the industry. That said, this could spell delays in Tesla production, which has been a factor in the past. The new Austin plant could be home to this new EV and what it offers while also being where a new production process is born. This new, cheap Tesla EV could be problematic in China.
In China, a cheap Tesla EV would be up against BYD’s lineup, along with low-cost EVs from other automakers. This could be detrimental to some EV stocks, including those of companies supplying Tesla with its parts and technology.
Production increases could spell success
Recently, Tesla increased capacity at its Berlin and Austin plants after expanding the Shanghai factory last year. The demand hasn’t kept up with output, but that could change as more traditional vehicles exit the market and EVs take over.
BYD is also ramping up production in some areas, with more China plants coming online. There’s a new BYD factory heading to Thailand, which will begin production in the third quarter. Another BYD location in Brazil will begin production in the early part of 2025. This company has plans to build plants in Hungary and Indonesia as well.
There are many factors that impact the performance of EV stocks, especially when you’re looking at the top electric vehicle automakers in the world. Will Tesla and BYD be able to go head-to-head in other markets soon?
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