In the midst of a market downturn, investing in an electric vehicle (EV) stock is a risky proposition. While demand continues to be strong (if a bit underwhelming in comparison to earlier estimates), automaker shares have largely underperformed benchmark indices since the start of the year.
To use the most blatant example, Tesla stock (NASDAQ: TSLA) was the second-worst performer in the S&P 500 on a year-to-date (YTD) basis at the time of writing. Since the start of the year, TSLA shares have lost 41.87% in value, while the S&P 500 has receded by 3.72%.
However, the malaise that is dragging domestic equities such as TSLA down doesn’t have an equal impact on foreign markets. What’s more, someone stands to benefit from the shakeup — and that someone is China.
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As admirably as Chinese equities have performed since the start of the year, the automobile industry in particular has solid growth prospects. While both European and American tariffs present crucial barriers for certain markets, on a global scale, only Chinese automakers can hope to gain an equal footing with the Elon Musk-led venture. If we’re going strictly by delivery numbers, some manufacturers, such as BYD, are already there.
BYD stock (OTCMKTS: BYDDY) has had a good run this year thus far. The price of BYDDY has increased by 58.53% since the start of the year.
The automaker will hold its next earnings call after market close on Monday, March 24. Here’s why now might be the right time to initiate a long position.
BYD, China’s largest EV stock, seems well-positioned for further growth
First, let’s backtrack. In the last quarter of 2024, BYD delivered 526,409 vehicles — in contrast, Tesla delivered 495,570. The company also marked notable advances in terms of market share. In January, BYD outsold Tesla in the United Kingdom, despite entering that particular market a full decade after the Elon Musk-led venture.
In addition, BYD recently unveiled a significant breakthrough in its charing capabilities on March 17. The Super e-Platform is reportedly capable of providing a charge sufficient for a 400-kilometer journey in just five minutes.
The company plans to deploy 4,000 of these stations across China — although exact details regarding the timeline of the project have been sparse. Should the move prove to be successful, it could begin to unravel one of Tesla’s chief advantages — the ubiquity and cross-compatibility of its charging infrastructure in the form of Superchargers.
Finally, Wall Street seems to be quite optimistic regarding this particular EV stock as well. As the automaker has beat earnings estimates six quarters in a row, expectations are high. Compared to last quarter’s earnings per share (EPS), which amounted to $1.12, analysts are expecting an even stronger showing, with the average estimate sitting at $1.39.
Notably, even at the lower end of analyst forecasts, the figures would still represent decent growth. Readers should note that Chinese EV stocks have a tendency to see profit-taking after positive earnings calls — so there’s a decent chance that even an earnings beat will cause a temporary pullback, which would present a more attractive entry point.
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