Tesla Stock Falls on Demand Concerns After Loss to BYD

On Wednesday, Tesla (TSLA) shares sank on demand fears after BYD (BYDDF) overtook it in the fourth quarter to become the best-selling EV brand.

Tesla shares shed -4.01% to $238.45 apiece on January 03, extending the losing streak to four sessions. Nevertheless, it made a 1.81% pre-market recovery to $240.42, and analysts expect a 2.21% further gain to $245.68 on Thursday.

Overall, Elon Musk’s flagship firm has declined -8.04% since it last closed in the green at $261.44 on December 27. Industry experts attribute the latest drop to investor jitters after the company was dethroned by its Chinese rival.

The Texas-based car maker topped projections of 483,173 by 0.28%, providing 284,507 electric vehicles (EVs) in Q4 2023. However, this feat was overshadowed by the report that Tesla was 8.65% behind BYD’s 526,409 deliveries.

Stakeholders grew concerned that Tesla’s share of the global EV market may continue to dwindle in 2024. BYD’s victory highlighted a major flaw in Tesla’s offerings – their prohibitive prices.

Competitors now have a blueprint on how to chip away at the American automotive company’s market share. They can beat Tesla by offering car models with slightly lower specs but significantly lower prices.

In addition, several of the firm’s EV models, including the popular Model 3, lost US tax credit eligibility on Monday. This will make it even harder for Tesla to engage in a price war with its rivals.

BYD and Its Quite Rise Above Tesla

During a 2011 interview, Elon Musk burst out laughing after a reporter pointed out BYD as a potential rival. More than a decade later, the Shenzhen-based EV maker toppled Tesla from the throne it held for almost two decades.

BYD gradually climbed to the top of the Chinese EV market using the accessible prices of its car models. A base Seagull has a starting price of $10,392.00, 67.90% cheaper than Tesla’s base Model 3, which costs $32,375.00 in China.

China’s EV king can afford to offer such low prices because it makes its own lithium iron phosphate (LFP) batteries. It also sells LFP batteries to other automakers, including Tesla, specifically for the Model Y.