Its electric cars have driven in from China, and now this company is being dubbed ‘the Tesla killer’ – with some justification.
Shares in Chinese electric vehicle champion BYD have accelerated to a record high and are up 52 per cent this year. At the same time, Tesla has been in reverse, losing more than 34 per cent of its stock market value.
So should investors leave Tesla – founded and run by President Trump’s ‘first buddy’ Elon Musk – by the roadside? And should they put their money into BYD instead?
As BYD eats Elon’s lunch, investors are concerned that the tycoon is stretching himself too thinly with his new government role as well as his business interests. These stretch from Tesla, to social media platform X, formerly Twitter, to AI and satellite company Starlink – and rivals are circling on all fronts.
Tesla, the company for which he is best known, is facing consumer boycotts from those who dislike his politics.
Motorists are already making the switch from Tesla to BYD’s electric vehicles in increasing numbers.
BYD – which stands for Build Your Dreams – sales hit a record high of 4.3 million cars last year, while Tesla saw a 1 per cent decline to 1.8 million.
The company is also set to report revenues of more than £77bn ($100bn) in its 2024 results tomorrow, beating out Tesla which raked in £75.6bn ($97.7bn) last year.
That pattern is mirrored on the stock market. Legendary US investor Warren Buffett, no less, is one of the Chinese company’s most famous backers.
Tesla is facing consumer boycotts from those who dislike Musk’s politics after he endorsed Donald Trump and was appointed head of the Department of Government Efficiency (DOGE)
Tesla has tanked in value since December. But shares in BYD hit a record high this week on claims it can charge its EVs in the same time it takes to fill up a traditional car with petrol.
‘Tesla’s Chinese rival BYD is surpassing its competitor with a new fast-charging technology,’ says Jochen Stanzl, chief market analyst at CMC Markets.
Of the 54 analysts who cover Tesla, 26 give the stock a ‘buy’ rating compared with 16 who rank it as ‘hold’ and 12 as a ‘sell’.
By contrast, 27 analysts out of 30 covering BYD give it a ‘buy’ rating compared with just two at ‘hold’ and one at ‘sell’.
Influential expert Dan Ives of US investment firm Wedbush is one of those who remains in the Musk camp. He argues that Tesla will ultimately come out on top.
‘BYD has gained market share versus Tesla but over the long-term Tesla will win the autonomous and robotics global market. Tesla has the scale and scope that is unmatched and there is only one Musk,’ he said.
BYD shares are listed in Hong Kong but can also be purchased on the US markets. UK investors can buy in through platforms such as Hargreaves Lansdown or apps including Trading212 and Etoro.
Small investors can spread their risks by looking for an investment trust or fund that has a holding in BYD.
A BYD Yangwang U9 on display. The company’s stock price has soared 52 per cent this year as it looks to capitalise on Tesla’s turbulence
The London-listed Baillie Gifford China Growth Trust counts BYD among its top ten holdings, as does the Liontrust China Fund.
As for Tesla shares, investors should check their exposure – they may have holdings in the company without realising through popular funds such as the Scottish Mortgage Investment Trust and the Baillie Gifford US Growth Trust.
The slump in the Tesla share price since mid-December has wiped more than £570bn off its value and £74bn off Musk’s fortune.
Hedge funds have cashed in. Those that took out short positions against Tesla – betting the stock price would fall – have made an estimated £12.5bn over the past three months.
As well as struggling to maintain Tesla’s dominance in the electric car arms race amid competition from China, Musk is facing a backlash in some quarters over his forays into politics.
All this comes as investors increasingly look beyond the US – including to China – as Trump’s trade wars fuel fears over the health of the world’s biggest economy.
BYD is not the only thorn in Musk’s side. Tesla, which he has run since 2008, is facing an assault on its market position from rival US upstarts and overseas challengers.
Other potential Chinese competitors apart from BYD include Xiaomi, which also makes smartphones, and Beijing-based Li Auto.
A protestor holds an anti-Musk sign. Other protests have seen Tesla vehicles vandalised or set on fire
Xiaomi and Li Auto are publicly traded on the Hong Kong Stock Exchange, meaning investors can buy their shares through mainstream trading platforms such as Interactive Investor.
Experts take a positive view on both.
Xiaomi is rated as a ‘buy’ by 31 analysts out of 35 while Li Auto has 27 ‘buy’ ratings from the 29 experts covering the shares.
Stephen Roberts, manager at Jersey-based fund Orgueil Capital, says Chinese EV firms look attractive. BYD, he points out, sells more cars but its shares are much cheaper than Tesla’s.
‘The only way in which Tesla has the lead on them is probably fully autonomous driving,’ he said.
Roberts added: ‘It’s becoming increasingly evident that China is making substantial strides in disrupting established players in the EV market, including industry leaders like Tesla.’
Tesla also faces growing competition from establishment brands Ford and General Motors (GM) as well as California-based upstart Rivian, which focuses on electric off-road cars, trucks and vans.
But Musk’s outfit maintains an edge over some of its US peers. Only 5 of Ford’s 26 analysts rate the stock as a ‘buy’ while another 5 rate it as a ‘sell’, partly due to fears that Trump’s trade tariffs will hit traditional American automakers.
Only 11 analysts out of 31 rate Rivian as a ‘buy’ and 17 out of 29 offer the same rating to GM.
As if that were not enough, Musk faces threats to his business empire from all sides, including from some of his former commercial partners.
SpaceX
Musk’s rocketry group is his most famous business aside from Tesla, with launches of its massive rockets often making headline news.
The value of the business, which is not traded on the stock market, has ballooned in recent years and last December hit a record of $350billion (£270billion) following a fundraising.
Investors cannot buy into SpaceX directly. However, some UK funds such as the popular Scottish Mortgage Investment Trust and the Baillie Gifford US Growth Trust both hold stakes in the business.
But SpaceX is facing growing competition from other American firms that have their eyes on the skies, particularly on lucrative contracts with the US space agency NASA.
Key rivals include Blue Origin, founded by former Amazon boss Jeff Bezos, United Launch Alliance (ULA), a joint venture between US-listed defence giants Lockheed Martin and Boeing, and Rocket Lab, a Nasdaq-quoted group set up by New Zealand entrepreneur Sir Peter Beck.
Bezos has yet to replicate the success of his rival billionaire. However, reports emerged this month that he is looking to bring the same aggressive work culture to his space firm in a bid to catch up to SpaceX.
Starlink
Another of Musk’s businesses under pressure from his political antics is Starlink, a satellite business that allows people to stay connected to high-speed internet in remote areas.
Its customer numbers are growing, but some users have decided to switch off Starlink in protest even if means worse connections.
The backlash has provided an opening to competitors including French outfit Eutelsat, which over the last six months has seen its share price surge 44 per cent on the Paris exchange.
Other rivals include Amazon’s Project Kuiper, which is aiming to put 3,000 satellites into orbit and provide broadband to hard-to-reach areas.
Also on the march is Taara, an internet company that uses laser beams to transmit internet signals between receivers. The firm was set up by Google’s parent company Alphabet but is about to be spun out into a separate company.
X (formerly Twitter)
One of the most prominent victims of the backlash against Musk’s support of Donald Trump is an exodus of users from his social media platform X, previously known as Twitter.
The tycoon’s decision to relax content moderation policies on the platform, coupled with his embrace of the US president, sparked a flood of users leaving the site.
In December it was estimated that 2.7 million users in the US had quit X in two months, although it is still estimated to have around 300 million daily active users.
The exodus is benefiting the likes of Twitter founder Jack Dorsey, whose new platform BlueSky, which he set up in 2021, seeing its daily active user base climb to as much as ten million.
Another potential beneficiary is Threads, another X rival launched in 2023 by Facebook owner Meta. The platform is estimated to have around 100 million daily active users.
But despite the exodus of left-wingers from the site it appears to be on the up. Earlier this month investors reportedly valued X at nearly £34billion, the same price Musk paid for the site back in 2022.
It is a dramatic upswing from September when X received a price tag of just £7.7billion from existing backer Fidelity Investments.
xAI
Musk is also struggling with rising competition in the field of artificial intelligence.
Earlier this year, a public feud erupted between the billionaire and his former business partner Sam Altman, the boss of ChatGPT maker OpenAI, which counts Microsoft as a major investor.
Last month, Musk launched an unsolicited offer worth nearly £80billion for the company which was swiftly rebuffed by Altman.
It promoted a pointed exchange on X where Musk branded Altman a ‘swindler’ and dubbed him ‘Scam Altman’.
It came after Musk’s own AI business, dubbed xAI, was frozen out of the Stargate Project, a $500billion (£385billion) joint venture backed by Trump to build large-scale AI data centres in the US.
OpenAI is a partner in the venture alongside New York-listed software giant Oracle and Japanese investment conglomerate Softbank.
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