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From newcomer to leader
If we were to look back in history, we would find that in the European market, not counting Norway and the Netherlands, BYD did not officially start operating until the end of 2022, which highlights the overall growth figure for April by 359% even more.
Looking at the closest competition, we see Tesla falling by 49%, while BYD was able to leapfrog even more permanent players such as Ford or Porsche with its sales. In the context of this race to acquire customers, it is also necessary to note that BYD has not yet even started operating production at the new Hungarian plant, so it is possible that the expansion of this relatively new player is only at the beginning.
How Chinese carmakers circumvented European tariffs
Of course, the evaluation of the latest results of foreign carmakers cannot do without an analysis of the geopolitical situation in which the given numbers and strategies have developed. In the autumn of last year, the European Union, due to suspicions of unfair practices by China, operatively introduced punitive tariffs on BEVs. However, the final value was not determined uniformly. BYD was hit by 17%, while the rate for other manufacturers climbed up to 35% in some cases. This has undoubtedly complicated the situation for Chinese carmakers, but even before the publication of specific figures, Rhodium estimated that in order for exports to Europe to stop paying off in the long term, the values would have to reach up to 55%.
However, manufacturers from China have left nothing to chance. They have very effectively diversified their product portfolios for the European market with Plug-in Hybrids (PHEVs), which are not yet subject to tariffs. This step was an ideal gateway for them, as evidenced by the impulsive year-on-year growth in Chinese PHEV registrations by 546%.
Declining sales, declining confidence
As we mentioned earlier, Tesla, which until recently was a symbol for the pinnacle of electromobility innovation, is currently going through a difficult period. Competition is growing at an exponential pace, and sales on a global scale are on a downward trajectory. In addition, the reputation of CEO Elon Musk himself also contributes to this combination. He is under fire for controversial statements and political ties. As a whole, these fundamental factors have traditionally been reflected in the development of Tesla's share price. To the April low, the price was in correction by almost 60% from the absolute maximum, and from this point there was a resumption of growth by the same percentage, but to reach the absolute maximum, the price must rise by another 44%.*
Source: Trading Economics*
Rising star
On the other hand, in contrast to Tesla, BYD currently acts as the embodiment of stability and growth. The share price has risen by almost 80% since the beginning of the year, while after the aforementioned results for April, the company gained another 3.9% on the stock market. The price thus responds directly to the company's fundamental input parameters, which are likely to remain as strong.*
Source: Trading Economics*
Time to change to a faster train?
What initially began as an inconspicuous entry of the Chinese carmaker into the European market is now reminiscent of a strategically thought-out expansion with a clearly defined goal – to take the lead in the electromobility segment. Despite tariffs, geopolitical tensions, and competitive pressure, BYD is proving to be one of the most dynamic players, managing to grow where other competitors are stagnating. In connection with this, it also represents an interesting opportunity from an investment point of view, as after a period of reduced price activity, the company is currently in a strong growth trend, along with fundamental growth potential for the next period. [1]
Warning! This marketing material is not and should not be construed as investment advice. Data relating to the past are not a guarantee of future returns. Investing in foreign currency can affect returns due to fluctuations. All securities trades can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which is subject to change. These statements do not guarantee future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s., regulated by the National Bank of Slovakia.
* Historical figures are not a guarantee of future returns.
[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which is subject to change. These statements do not guarantee future performance. Forward-looking statements involve risk and uncertainty by their nature because they relate to future events and circumstances that cannot be foreseen, and actual developments and results may differ materially from those expressed or implied in any forward-looking statements.
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