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Tesla’s cheaper models are coming; Which EV stock is already leading the value pack?

Tesla's cheaper models are coming; Which EV stock is already leading the value pack?
Bogdan Stojkov

The electric vehicle (EV) industry is witnessing a major shift as Tesla (NASDAQ: TSLA) announces plans to speed up the launch of more affordable vehicles, contrary to previous speculations. This move by the EV giant has stirred considerable excitement among investors, reflecting positively on the stock market. Yet, there’s another EV stock worthy of investors’ attention, and it’s already leading the value pack.

Tesla accelerates affordable model rollout

In a groundbreaking development, Tesla revealed its decision to fast-track the introduction of new models during its first-quarter shareholder release. Contrary to earlier indications of delaying these plans, Tesla now aims to roll out these vehicles ahead of schedule. Tesla’s CEO, Elon Musk, hinted during the earnings call that the timelines for these new models could even see fruition as early as the beginning of 2025, if not sooner.

Although specifics about the debut of the cheaper EV remain undisclosed, Musk promised further insights during the company’s presentation on August 8, coinciding with the revelation of the much-anticipated robotaxi.

Tesla’s statement emphasized that these upcoming vehicles, including the more affordable variants, would leverage elements from both the next-generation platform and existing platforms. Notably, this strategy enables efficient production by utilizing the same manufacturing lines as Tesla’s current vehicle lineup.

Despite posting a revenue and earnings shortfall in the first quarter on April 23, 2024, Tesla’s stock witnessed a remarkable surge of 12% by the end of the next day. The market’s bullish response underscores the significance of Tesla’s strategic pivot towards offering more affordable EV options.

Investor response and financial performance

The upbeat reaction from investors comes in the wake of Tesla’s revenue and earnings miss for the first quarter. Bloomberg data indicates that Tesla reported adjusted earnings per share of $0.45, falling short of the estimated $0.52. Similarly, the company’s revenue of $21.30 billion missed forecasts of $22.3 billion, marking a 9% decline from the previous year and Tesla’s first drop in four years.

In terms of profitability, Tesla reported $1.2 billion in operating profit and $1.5 billion in adjusted net income for the first quarter. However, both figures fell significantly below expectations and witnessed a decline of over 50% compared to the previous year.

Tesla stock price today

As of April 25, 2024, the price of TSLA stock stands at $162.13, indicating a year-to-date decrease of $82.29.

Tesla’s production challenges

Tesla’s first-quarter report also shed light on its production and delivery figures, which fell short of market expectations. The company reported 386,810 global deliveries, significantly below the estimated 449,080, and produced 433,371 vehicles, also missing estimates of 452,976. Despite these figures, Tesla highlighted a significant milestone in April, with Cybertruck production hitting 1000 units per week.

However, concerns regarding global demand surfaced due to the disparity of approximately 46,500 vehicles produced versus sold. This discrepancy has prompted Tesla to implement successive rounds of price cuts in a bid to stimulate demand. Recent price reductions in the US and China, announced just before the earnings call, resulted in temporary weakness in Tesla’s stock value.

BYD dominates the affordable EV landscape

When it comes to EV stocks, BYD Company (OTC: BYDDF) emerges as a formidable contender, particularly in the Chinese market. In 2022, BYD’s vehicle sales surpassed those of Tesla, underscoring its dominance in the burgeoning EV sector. Although Tesla briefly reclaimed the crown for all-battery electric vehicles (BEVs) in Q1 2024, BYD remains a key player in shaping the industry landscape.

Despite a sluggish start to 2024, marked by a dip in sales attributed to seasonal factors and consumer anticipation for price cuts and new models, BYD rebounded strongly in March. The company’s strategic maneuvering, including sweeping price cuts across its product lineup and advancements in technology, propelled sales momentum.

In the first quarter, BYD reported robust sales figures, with 626,236 EVs delivered, including 300,114 passenger BEVs. This performance, although lower than Q4 2023, showcased resilience and marked a significant year-over-year increase. With BYD’s relentless pursuit of innovation and affordability, the company is poised to reclaim its BEV crown from Tesla in Q2, underscoring its competitive edge.

A closer look at BYD’s strategy

BYD’s recent price adjustments, coupled with technological enhancements across its vehicle portfolio, exemplify the company’s strategic focus. Leveraging advantages stemming from lower lithium prices and vertical integration, BYD slashed prices across its product spectrum by more than 10%.

BYD’s aggressive pricing strategy, coupled with investments in smart technologies and driver-assist systems, positions the company as a formidable competitor against traditional gas-burning vehicles.

BYD stock price today

As of April 25, 2024, BYD stock price on the OTC market (over-the-counter) stands at $25.65, showing a slight year-to-date downtick of $1.20.

The bottom line

While Tesla’s pursuit of innovation and market expansion garners attention, BYD’s steadfast focus on affordability and technological prowess positions it as a front-runner in the global EV stock market. As investors await further clarity on Tesla’s strategy and growth prospects, BYD’s resilient performance underscores the resilience of its business model. With both companies poised to play pivotal roles in shaping the future of electric mobility, the stage is set for an electrifying journey ahead.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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