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There are three letters keeping Tesla bulls up at night: BYD.
That’s the carmaker eating everyone’s lunch in China, the world’s biggest auto market, and rapidly gaining market share around the globe (except in the United States, of course, because of longstanding trade restrictions on Chinese imports).
On Monday, BYD reported $107 billion in revenue for 2024 — crossing the $100 billion level for the first time and besting Tesla’s annual revenue by about $10 billion. That milestone came a week after BYD unveiled a charging system that it says will give its latest EV model 250 miles of range after plugging in for just five minutes.
BYD’s Hong Kong-listed shares are already up more than 50 percent this year.
The Chinese company’s week of blowout news should amount to a rather satisfying dunk on Tesla CEO Elon Musk, who once scoffed at the idea of BYD as a competitor and who is currently a rather unpopular member of the Trump administration. (Trust us, we did polling!)
BYD’s moment in the sun comes just as Tesla is sliding into a crisis.
Tesla investors have been offloading their stock for nine straight weeks, largely because of good old-fashioned business reasons, including:
- Global sales fell last year for the first time ever, and this year isn’t looking much better.
- Competitors are eating into its market share, especially in China.
- Tesla’s core products haven’t had significant updates in years, and a long-promised low-cost model hasn’t yet materialized.
- While Tesla has been an EV pioneer, it is lagging behind Google’s Waymo in the race toward autonomous driving.
But those are hardly the only reasons.
Musk’s extracurricular gig as President Donald Trump’s hatchet man has turned the Tesla brand — once a favorite among upwardly mobile lefties — into a symbol of America’s right wing. Used Tesla prices are tanking even as interest in used EVs rises.
The White House has responded with a series of stunts — a live presidential endorsement on the South Lawn, the commerce secretary shilling for Tesla stock on Fox News, the FBI threatening vandals with terrorism charges — that all smack of desperation. (They are also so out of step with legal convention, ethics experts are struggling to wrap their heads around them.)
Tesla shares began rebounding Friday after Musk called an all-hands meeting Thursday night in which he urged staff to hold onto their stock. Retail investors have piled in, helping shares gain 5 percent on Friday and 12 percent on Monday.
But the stock remains more than 40 percent off its December record high, and several analysts have reined in their expectations for the year.
BYD isn’t the only Chinese competitor sapping Tesla’s market share. In Europe, Tesla sales fell 44 percent in February while Chinese brands broadly went up 82 percent, according to a report from JATO, which analyzes auto market data.
Part of that decline had to do with a gap in Tesla’s overhaul of its bestselling Model Y, JATO analyst Felipe Munoz said. But Musk’s support for a far-right German party accused of sympathizing with Nazis likely didn’t help — sales in Germany, Europe’s biggest car market, sank 75 percent last month.
Perhaps the biggest threat BYD poses to Tesla: It’s managed to make a variety of sleek, tech-enabled cars — both EVs and plug-in hybrids — at a fraction of the cost. The entry-level BYD EV now starts at under $10,000 in China. Tesla’s Model 3, its cheapest model, costs three times more at $32,000.
On Monday, BYD launched a new electric sedan with roughly the same specs as a Tesla Model 3 for half the price, Elektrek reported. Then new Qin L EV comes with BYD’s smart driving tech and gets over 330 miles of driving range, starting at $16,500.
Tesla is reportedly working on a smaller, cheaper version of its Model Y in an effort to regain some of the ground it has lost in China. But mass production isn’t expected to begin until 2026, according to unnamed sources cited by Reuters.
Bottom line: Musk badly underestimated BYD, which stands for “Build Your Dreams,” back in 2011, when he dismissed a Bloomberg interviewer’s question about the Chinese carmaker posing a threat to Tesla. “Have you seen their car?” he asked rhetorically.
But more than a decade later, BYD has surpassed Tesla in annual revenue and upended the global market for EVs. Tesla remains the best-selling EV maker in the US, thanks to the nation’s tariffs aimed at protecting US manufacturing. Absent those trade barriers, BYD could fast become Musk’s nightmare.
