• Current challenges are transforming Tesla’s story from the saga of a juggernaut into a tale of volatility and recalibration.
• Chinese competitor BYD has taken the opposite path: It’s steadily expanding its global presence, outpacing Tesla in both vehicle sales and profits.
• Plus, BYD still has a valuation that leaves room for upside.
• For investors, the contrast is striking — Tesla offers intrigue and trading opportunities, while BYD presents a case for long-term growth. 

Tesla (TSLA) may still command the spotlight, but the real EV momentum is building across the Pacific. While Elon Musk’s politicized agenda has triggered backlash, boycotts and concern, China’s BYD (BYDDF) has kept its focus on execution. One example of BYD’s newfound reach is the recently launched Dolphin Surf in Europe. The subcompact car is priced around £18,000 (approximately $23,000 US dollars) — an astonishingly low figure for a sleek, tech-forward electric vehicle.

It’s the type of product that’s helped make BYD the world’s largest EV maker. The divergence is plain in the stocks: Tesla is down 15% year-to-date, while BYD has surged more than 50%. Today, we’ll take a closer look at these two EV giants — one navigating turbulence, the other executing with precision — and assess where each may be headed in the second half of the year.

Tesla: still electric, but losing charge

As indicated by the fading brand cachet and cooling media buzz, Tesla’s leadership in the EV sector is starting to fizzle. Automotive sales continue to make up more than 80% of revenue, yet growth in that core segment has slowed amid rising competition, lagging product rollouts and mounting reputational damage. Much of the recent backlash stems from Musk’s political activism, especially his work with President Donald Trump and vocal support for far-right European parties. The controversies have triggered protests and boycotts in critical markets, weakened store traffic and dimished brand equity abroad. Then, in June, a public falling-out between Musk and Trump over federal funding sent shares tumbling 15%.

Tesla’s long-promised innovations have also begun to lose their luster. The Cybertruck, once hailed by some as a design breakthrough, has disappointed in both reviews and sales. The long-delayed Roadster remains nowhere in sight, and the robotaxi initiative — touted as the company’s future growth engine — continues to trail competitors like Waymo in both safety metrics and regulatory momentum. Even previously hyped ventures like Tesla’s Solar Roof for houses have run into execution snags, with installation delays and post-contract cost hikes frustrating customers.

At the same time, policy shifts are adding pressure to Tesla’s already strained growth story. The Trump administration is moving to eliminate federal EV tax credits — once worth up to $7,500 per vehicle — a key selling point the company has long relied upon to support demand and justify pricing. Without those incentives, affordability could take a hit, potentially dampening consumer interest at a time when competition is surging. Layer on a fragile global supply chain and a fresh wave of tariffs on EV components, and the threats to its pricing power and profit margins become even harder to ignore.

But not everything is working against Tesla. Its energy storage and services divisions continue to post modest but steady growth, supported by rising demand for grid infrastructure amid the AI-driven surge in power needs. The company’s financial position remains robust, with $47 billion in cash on hand — providing ample flexibility to navigate near-term headwinds. And despite recent controversies, the brand commands global recognition and still has international influence.

Still, the road ahead looks increasingly uncertain. Once viewed as an unstoppable force in clean tech, Tesla is now grappling with the weight of its own ambitions and mounting scrutiny. The long-term promise remains, but the market is no longer pricing in the same level of confidence that the company will fully deliver on it.

Elevated valuation meets enduring bullishness

Tesla’s Q1 results set a cautionary tone for 2025. Revenue fell 9% year-over-year, while automotive sales — the company’s core business — tumbled 20%, the steepest drop in years. Net income plunged over 70% to $409 million, and operating margins shrank to just 2.1%. Management pointed to temporary production upgrades and the launch of a refreshed Model Y, but deeper challenges are arising. Price cuts of $1,000–$2,000 failed to revive demand and only added pressure to already strained margins. And with the company no longer issuing forward guidance, investors are left with more questions than answers.

Despite the challenges, Tesla continues to generate strong cash flow, pulling in over $2 billion from operations in Q1. This liquidity gives the company breathing room, but it doesn’t justify its lofty valuation. With a trailing P/E of 169 and a price-to-sales ratio near 10, The company’s stock still trades at a premium that far exceeds both traditional automakers and many high-growth tech names. Analyst sentiment reflects the uncertainty: Of the 55 covering the stock, 26 rate it a “buy,” 18 a “hold,” and 11 a “sell.” The average price target sits near $310, about where the stock trades now, underscoring the need for a stronger growth narrative to unlock further upside.

Even so, the stock’s volatility continues to offer tactical opportunities. After a sharp pullback, shares look far more appealing than they did when trading $490 per share after the election. For high-conviction bulls and nimble traders, sub-$330 levels may represent a reasonable entry point, especially if macro conditions stabilize and Musk re-focuses on Tesla’s core business. But until product execution improves and margins rebound, upside may be capped. In the near term, the stock continues to look like a classic high-beta swing trade: Buy the dips, fade the rallies and stay nimble.

BYD: the EV juggernaut that’s outscaling Tesla

While Tesla continues to dominate the electric vehicle conversation in the West, China’s BYD has quietly overtaken its rival in the numbers that matter most. In 2024, BYD generated $107 billion in revenue, surpassing Tesla’s $98 billion and cementing its lead as the global EV volume leader. It’s even more striking that BYD’s net income last year came in at $5.6 billion, nearly two and a half times Tesla’s. With 15% global EV market share compared to Tesla’s 12%, and aggressive export expansion now underway, BYD has graduated from rising star to global heavyweight.

BYD’s meteoric rise hasn’t been without controversy. The company’s ascent has been fueled in part by China’s industrial policy of state-backed subsidies, aggressive scaling and deep vertical integration that many Western governments argue give the company an unfair edge. In response, the US and Europe have imposed steep tariffs and tightened scrutiny around Chinese EV imports. Yet instead of retreating, the company is adapting quickly, unveiling plans to establish manufacturing hubs in seven overseas markets, including Europe, Latin America and potentially even North America, to sidestep trade barriers and solidify its global footprint.

Much of BYD’s competitive edge stems from its unmatched vertical integration. The company not only assembles its vehicles but also produces many of the underlying components, including its own batteries, which are often cited as 40% of total EV costs. The company’s in-house production and automation help lower costs, enhance quality control and speed up innovation cycles, particularly in vital areas like lithium supply and energy storage. This depth of integration not only fuels margin expansion but also reduces supply chain vulnerabilities, an increasingly valuable trait in the post-pandemic world.

On the operational front, BYD continues to post strong numbers. First-quarter net profit doubled year-over-year to 9.2 billion yuan (about $1.26 billion), fueled by the launch of its new “God’s Eye” smart EV platform of driver assistance systems and its cutting-edge fast-charging technology. Revenue climbed 36%, with growth in domestic and international markets. Analysts now project vehicle volume will grow more than 30% in 2025, with exports expected to account for 14% of total deliveries. While China still accounts for 90% of the company’s sales, that balance is poised to shift as global infrastructure improves and consumer adoption accelerates in key markets.

For investors looking for growth without paying peak multiples, BYD’s valuation metrics remain surprisingly reasonable. The stock is up 50% year-to-date yet still trades around $50, well below the average analyst price target of $85. And while its trailing P/E ratio of 24 doesn’t qualify as a bargain, it’s a far cry from Tesla’s lofty 169. Meanwhile, the company’s price-to-sales ratio stands at just 1.3 (vs. a sector median of 1), and its P/B ratio is 5 — reasonable for a fast-scaling innovator with global ambitions. Although analyst coverage remains limited, every firm currently tracking the stock rates it a “buy” or “overweight,” underscoring the momentum building behind BYD’s story.

All told, BYD’s recent trajectory has been nothing short of remarkable. The company is scaling at breakneck speed, delivering stronger profits, and expanding its global reach more aggressively than any other player in the EV sector. Where Tesla’s valuation leans heavily on future promises, BYD’s investment case is rooted in operational excellence, cost leadership and solid execution. For investors seeking exposure to the EV transition without the speculative premium, BYD stands out as a compelling alternative. We continue to rate the stock a “strong buy.”

Takeaways

Tesla and BYD both sit atop the global EV leaderboard, but they represent vastly different investment propositions.

For Tesla, we continue to believe the stock will be higher one to two years from now. Despite political turbulence, brand damage and uneven execution, the company’s technological ambition, strong cash position and dominant market presence still make it one of the most compelling innovation plays of the decade. Investors with a long-term horizon and a tolerance for volatility may find current levels reasonable, especially if the company’s next wave of autonomous platforms and energy initiatives gain traction.

But Tesla isn’t just a long-term bet. It’s also a proven trading vehicle. Over the past several years, the stock has cycled through dramatic swings, offering active investors repeated entry and exit points. That pattern has continued in 2025, making the stock particularly well-suited for tacticians who are comfortable leaning into news-driven pullbacks and shifts in sentiment. Whether as a core holding or a tactical trade, the company remains a lightning rod for investor attention — and price action.

BYD, in contrast, is proving that in an emerging industry defined by disruption, steady can be just as powerful as bold. With scale advantages, cost leadership and momentum in both revenue and profits, the company is beginning to look less like a regional upstart and more like a global category killer. Analyst sentiment is firmly bullish, and the stock still trades at levels that don’t fully reflect its operational progress or global ambitions. For investors seeking long-term exposure to the EV transition — without the drama — it clearly earns a “buy” rating. 

Editor’s Note: During the week of June 9, BYD underwent an effective three-for-one stock split. As a result, the shares now trade for around $17, down from the $50 per share referenced in this article. Thus, the average analyst price target has been adjusted to approximately $28–$29 per share, vs. the $85 per share pre-split estimate.

Note this was not a traditional three-for-one split. Instead, BYD’s corporate action was carried out through a combination of bonus share issuance and capital reserve conversion. As a result, shareholders received three times the number of shares they previously held, which resulted in adjusting the share price down to $17 per share (from $50 per share). Though structured differently, the result is similar to a standard three-for-one split, in both form and function.

Andrew Prochnow, Luckbox analyst-at-large, has traded the global financial markets for more than 15 years, including 10 years as a professional options trader.

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