In a surprising turn of events, Chinese company BYD has surpassed Tesla as the world’s largest-selling electric vehicle (EV) maker in the fourth quarter of 2023. Despite this achievement, Tesla’s market capitalization of $760 billion remains nearly ten times that of BYD, highlighting the ongoing skepticism surrounding Tesla’s valuation.
According to UBS, BYD and other Chinese companies are poised to dominate the global market with their low-cost EV offerings. This development raises questions about Tesla’s ability to maintain its position as a leader in the industry, especially as competition continues to intensify.
Elon Musk, CEO of Tesla, has responded to the comparisons between Tesla and BYD by emphasizing that Tesla is more than just a car company. Musk asserts that Tesla is an AI/robotics company that happens to produce cars. While this assertion may seem fanciful to some, it is worth noting that Tesla’s financial accounts indicate that the majority of its revenue, approximately 95%, comes from automotive sources.
Financial journalist Herb Greenberg points out that Tesla’s own regulatory filings primarily focus on its automotive operations rather than AI or robotics. The company’s use of the terms “automotive” and “automobile” far surpasses mentions of “AI” or “robotics” in these filings.
While there is truth to the argument that markets have never viewed Tesla solely as a car maker, classifying it as an AI/robotics company is a stretch. Tesla’s success has largely been attributed to its innovative approach to electric vehicles, as well as its brand image as a tech company. However, it is important to acknowledge the competitive landscape and the increasing influence of Chinese EV manufacturers like BYD.
As the EV market continues to evolve, Tesla will face mounting pressure to maintain its dominance and prove that its valuation is justified. The rise of BYD signals a shift in the industry, and it remains to be seen how Tesla will respond to this new challenge.
The source of the article is from the blog scimag.news