Tesla (TSLA) shares have tumbled nearly 32% in 2025, with the electric vehicle maker facing what long-time bull Dan Ives of Wedbush Securities calls a “brand tornado crisis moment.” The stock’s steep decline stems from multiple challenges, including weak global sales and mounting concerns over CEO Elon Musk’s involvement in President Donald Trump’s administration.
Tesla’s vehicle deliveries have plummeted across key markets, with sales in Germany dropping 59% and China registrations falling over 51% year-over-year in February. Meanwhile, competitors like BYD (BYDDY) have gained significant market share in the last two years. These factors have prompted investment banks such as JPMorgan to slash delivery forecasts by 20%.
Moreover, Musk’s political role has sparked consumer backlash, with some protesters even vandalizing Tesla vehicles and charging stations. Despite Trump's public support — including hosting an event featuring the cars at the White House and purchasing a vehicle — investor frustration has intensified.
The troubles continued with the recall of nearly all 46,100 delivered Cybertrucks over defective panels. While Ives maintains an “Outperform” rating with a $550 price target, he warns that Musk must refocus on Tesla to avoid “permanent brand damage.”
Tesla Is Losing Market Share to BYD
According to a Bloomberg report, BYD is expected to report revenue of $100 billion in 2024, higher than Tesla’s sales of $97.7 billion last year. The milestone comes amid BYD’s accelerating growth as the company aims to transition away from gasoline-powered vehicles. In the last 12 months, BYD has reported revenue of $94.18 billion, an increase of almost 18% year-over-year.
Bloomberg explained that BYD now rivals Tesla in EV sales. In 2024, Byd delivered 1.76 million EVs compared to Tesla’s 1.79 million. However, when including its hybrid vehicles, BYD’s total deliveries reached 4.25 million units last year — nearly matching Ford’s (F) output — with projections of 6 million vehicles for 2025.
BYD’s shares have surged almost 60% this year in Hong Kong after it unveiled groundbreaking technology for its charging system that enables 250 miles of range from just five minutes of charging.
Despite these achievements, BYD faces challenges, including infrastructure investments for 4,000 super-fast charging stations in China and limited market penetration in Europe and the U.S. due to tariffs and restrictions on Chinese-made vehicles.
In the last four quarters, BYD’s gross margins have stood at 20.6%, higher than Tesla’s margins of 17.9%. Alternatively, BYD’s operating margin is lower at 5.9%, compared to Tesla’s 7.8%.
Is Tesla Stock Still Overvalued?
BYD’s free cash flow in the last year has totaled $5.17 billion compared to Tesla’s $3.58 billion. While Tesla is valued at a market cap of $800 billion, BYD is much smaller at $166 billion. So, while Tesla is priced at 164x forward cash flows, Byd is priced at 25.2x forward FCF.
Despite the ongoing pullback, TSLA stock trades at a premium. Out of the 40 analysts tracking Tesla, 15 recommend “Strong Buy,” three recommend “Moderate Buy,” 12 recommend “Hold,” and 10 recommend “Strong Sell.” The average target price for TSLA stock is $338.94, 21% above the current trading price.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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