Tesla woes bolster appeal of top China EV maker BYD: Tech Watch
Even as the supercharged rally in Tesla Inc. cools on weaker sales growth, expectations are ramping up for China's top electric-vehicle maker BYD Co. thanks to record-high profits.
BYD is rapidly closing in on Tesla as the world's biggest seller of pure electric vehicles. Yet shares of Elon Musk's company are still up 68% this year, even with the recent pullback, far outpacing the 28% rise in BYD's Hong Kong-listed stock.
That could be poised to change. Traders have snapped up bullish options on BYD, while analysts have raised earnings-per-share projections for the Chinese company to a record high since its preliminary quarterly report this month. BYD posted all-time high sales despite intensifying competition and a broader slowdown in sales of China's new-energy cars.
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BYD Shares Jump on China EV Maker's Record Quarterly Profit
Musk cast a pall over the global EV sector with a grim outlook just one day later, saying rising interest rates in the US have hurt its sales. Tesla's results are also suffering from the months-long price war that it had initiated in an attempt to fuel demand.
The market is responding to the companies' diverging fortunes. BYD shares are up more than 1% this month while Tesla has plunged 17%, leading global peers lower. At the same time, earnings estimates have risen for the Chinese automaker and dropped for its larger US rival.
“BYD still looks like the safest bet versus Tesla in the short term given its discipline in terms of balancing volume growth with profitability,” said Kevin Net, head of Asian equities at Tocqueville Finance. “It also has growing exposure to hybrids, which have been gaining market share in China and contribute to higher margins.”
Tesla's
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