Tesla TSLA has long been the poster child of the electric vehicle (EV) revolution. Since its IPO in 2010, this U.S.-based company has grown into a global icon, known for its sleek designs, bold innovation and a loyal fan following. But the landscape is shifting fast. With the future of transportation being electric, many automakers are quickly catching up to challenge Tesla’s dominance. And leading this competition is China’s BYD Co. Ltd. BYDDY, which started in 1995 as a battery maker and has rapidly transformed into a formidable EV juggernaut. With deep roots in battery technology and a growing global footprint, BYD has emerged as Tesla’s most serious challenger yet.
In the fourth quarter of 2023, BYD briefly took the EV sales crown from Tesla before ending the full year just behind. The same pattern repeated in 2024. In the first quarter of 2025, BYD delivered over 416,000 battery electric vehicles (BEVs), outpacing Tesla’s 336,000 and securing the top spot for a second straight quarter. Meanwhile, Tesla’s deliveries declined both year over year and quarter over quarter.
As the EV race heats up, both companies are pushing boundaries. However, with BYD’s aggressive growth and Tesla’s recent slowdown, the gap between the two is closing fast. So, in this high-stakes battle for EV supremacy, who should you place your bets on? Let’s find out.
A Closer Look at Tesla
Tesla is facing rising pressure in its core EV business. Sales are slipping across key markets like the United States, Europe and China, while the brand's once-unchallenged appeal is starting to fade. CEO Elon Musk’s growing involvement in the Department of Government Efficiency has raised concerns about his ability to stay focused on Tesla, especially as the company wrestles with slowing demand and intense competition. Although Musk still anticipates some growth in vehicle sales this year, he has dialed back his earlier 20–30% growth forecast. Adding to the concern, Tesla’s automotive margins are shrinking as the company continues to roll out discounts and incentives to drive sales. Moreover, talks of its much-awaited affordable model getting delayed are adding fuel to the fire.
On the bright side, Tesla’s Energy Generation and Storage segment is gaining traction. Products like the Megapack and Powerwall have been well-received, helping energy storage deployments jump 113% year over year in 2024. Musk expects at least 50% more growth in 2025. Tesla’s charging infrastructure business is also performing well. Recently, TSLA claimed that its in-house 4680 battery production is now more cost-effective than external sourcing. That’s a major milestone for the automaker.
Looking ahead, Tesla’s big bet is on its autonomous driving ambition. The company plans to roll out unsupervised FSD in Austin this June. Last month, it secured the first of several approvals required to eventually launch its long-awaited robotaxi service in California. Progress in FSD approvals and robotaxi development is critical with no further delays.
Financially, Tesla remains on solid ground, with high liquidity and low debt. Its long-term debt-to-capitalization is just around 7%, and it has a strong interest coverage ratio of 27.7.
A Closer Look at BYD
BYD has become a dominant force in China’s electric vehicle landscape, commanding about one-third of the country’s new energy vehicle (NEV) market. It holds the largest EV market share in China, thanks to its highly efficient, vertically integrated business model. From batteries and semiconductors to complete vehicle assembly, BYD controls nearly every part of its supply chain. This tight integration helps keep costs low and operations efficient — an essential advantage in today’s price-sensitive EV market.
The company produces lithium-iron phosphate batteries under its Blade Battery brand. It recently introduced the "Super e-Platform," which promises major gains in range and charging speed. BYD claims its latest batteries can deliver up to 400 kilometers (roughly 249 miles) of range with just five minutes of charging, potentially a game-changer in EV usability.Its vehicle lineup caters to a wide spectrum of consumers, from affordable options like the Seagull to luxury models under the Yangwang brand. Popular hybrids and EVs such as the Song and Qin series continue to drive strong domestic sales. On the tech front, BYD is making strides with its new “God’s Eye” autonomous driving system, which offers advanced safety features at a competitive price.
Internationally, BYD is expanding rapidly, setting up factories in Brazil, Thailand, Hungary, and Turkey while growing its retail presence in markets like Germany and Australia. It aims to double overseas sales to over 800,000 units in 2025. However, rising regulatory risks—especially in Europe, where the EU is investigating Chinese EV subsidies—pose potential hurdles.
BYD’s net profit jumped 34% in 2024 to RMB 40.25 billion, while revenues rose 29% to a record RMB 777.1 billion ($107 billion).
Estimates for TSLA & BYDDY
The Zacks Consensus Estimate for both Tesla and BYD’s 2025 earnings suggests year-over-year improvement. However, the consensus mark for TSLA has declined over the past 30 days, whereas the same for BYD has risen.
Zacks Investment Research
Image Source: Zacks Investment Research
Zacks Investment Research
Image Source: Zacks Investment Research
BYD’s Valuation Attractive Than Tesla
Tesla is trading at a forward sales multiple of 7.08X, above its median of 6.62X over the last two years. Tesla has a Value Score of F. Meanwhile, BYD has a Value Score of B, with its forward sales multiple at 0.95X.
Zacks Investment Research
Image Source: Zacks Investment Research
Conclusion
Given the current landscape, BYD appears better positioned than Tesla. BYD’s strong domestic leadership, expanding international presence, cost advantages through vertical integration, charging efficiency and autonomous technology make it a better choice. Plus, BYD’s more attractive valuation and positive earnings revisions offer additional upside potential.
Meanwhile, Tesla is grappling with slowing sales, shrinking margins and leadership distractions. Tesla’s non-automotive segments are doing well but they make up a relatively small portion of the company's total revenues. Tesla’s high valuation and southbound estimate revisions further dim confidence.
While BYD currently carries a Zacks Rank #3 (Hold), Tesla carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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