China’s BYD (SZ:002594) has reported a significant 21% increase in its second-quarter electric vehicle (EV) sales, narrowing the gap with Tesla (NASDAQ) after losing the title of the world’s top EV vendor to the U.S. company in the first quarter.
BYD’s Strong Performance:
In the April-June quarter, BYD sold 426,039 EVs, based on Reuters’ calculations from its monthly sales reports. This figure is approximately 12,000 vehicles fewer than Tesla’s estimated deliveries for the same period.
Tesla’s Challenges:
Tesla is anticipated to announce a 6% decrease in vehicle deliveries for the April-June quarter on Tuesday. This would mark the first time Tesla posts two consecutive quarters of decline, due to intense competition in China and a slowdown in demand linked to the absence of new, affordable models. Barclays predicts an even steeper 11% drop in Tesla’s second-quarter deliveries, which would be the company’s largest ever quarterly decline.
Tesla’s rapid growth over recent years has established it as the world’s most valuable automaker. However, the company warned in January that delivery growth in 2024 would be “notably lower” as the impact of extended price cuts diminishes.
Production Adjustments:
In response to weakening demand for its older models in China, its second-largest market after the United States, Tesla has reduced production of its best-selling Model Y by a double-digit percentage at its Shanghai plant since March, according to a Reuters report in May.
BYD’s Steady Growth:
In contrast, BYD has maintained steady growth in its EV sales. Additionally, Chinese EV startup Nio (NYSE) reported substantial growth, with its vehicle deliveries more than doubling to 57,300 units in the second quarter.
Market Dynamics:
The surge in sales for Chinese EV makers is driven by price cuts and a shift in consumer demand from gasoline-powered vehicles to EVs and hybrids. According to Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), new energy vehicles (including EVs and plug-in hybrids) accounted for 46.7% of total car sales in China in May, setting a new monthly high.
Investment Considerations:
With BYD’s strong performance and Tesla’s potential struggles, investors may be reevaluating their positions. Before buying TSLA stock, consider leveraging tools like Investing.com’s ProPicks, which offers model portfolios and AI-driven stock recommendations. This service helps investors identify promising stocks, potentially yielding significant returns in the coming years. It remains to be seen if TSLA will be among the top picks for future growth.
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