There was a widespread expectation that the year 2024 would bring increased competition for Tesla (NASDAQ: TSLA). Sectors that once seemed to pose a threat to Tesla’s dominance, such as the legacy automakers Ford and General Motors, have since slowed down their pace in the electric vehicle (EV) market.
However, a new contender has emerged, taking many by surprise. Chinese EV manufacturer BYD (OTC: BYDDY) has now taken the lead as the top seller of fully electric cars, leaving Tesla at a seemingly disadvantageous position.
Embracing Diversification in Growth
Despite a 20% drop in shares for Tesla in 2024, the success of BYD highlights the potential for Tesla to once again emerge as a prominent growth stock. BYD’s preliminary update for the fourth quarter of 2023 projected a significant increase in profits by 75% to 86% compared to the previous year, driven by a surge in sales.
BYD’s strategic focus on affordable mass-market EVs has allowed it to outperform Tesla, with over 525,000 battery electric vehicles sold in the last quarter alone.
The Chinese automaker’s global reach is expanding with the introduction of budget-friendly EVs in South America and potential plans for a manufacturing plant in Mexico to penetrate the U.S. market.
Tesla, on the other hand, is gearing up to unveil a lower-priced EV later this year. This move could be the catalyst needed to reignite Tesla’s growth trajectory. With BYD’s success story as inspiration, investors should not underestimate Tesla’s ability to capture a significant market share in the evolving EV landscape.
*Stock Advisor returns as of February 26, 2024