EV Industry Update: Tesla, BYD, and More

The Electric Vehicle (EV) industry has been under the spotlight lately as companies from Rivian to Tesla and BYD revealed valuable insights into how they have fared and how consumers have been approaching their products recently. 

In addition, the Chinese EV sector, in particular, may have had a surprisingly good performance last month despite the overall economic woes in China. So, what is happening in the EV industry and how are EV stocks reacting? Here’s what you need to know:

Tesla Sales & Deliveries Drop: Could BYD Take the EV Lead?

Monday may have been a dreary day for EV giant and leader Tesla (TSLA). Apparently, Tesla’s deliveries fell by 6% as it delivered 435,059 vehicles in Q3. This not only fell below Q2’s 466,140 deliveries but also came in below analyst expectations as deliveries of about 455,000-461,000 vehicles were predicted. The drop, according to Musk is attributed to “planned downtimes for factory upgrades, as discussed on the most recent earnings call.” 

On the flip side, on the same day, Tesla’s Chinese rival BYD (1211. HK) reported record EV sales and deliveries as its sales exceeded the 2-million mark for the year. According to the data, BYD’s Q3 sales were up 17% QoQ as the company sold 824,001 vehicles. Some noted that Tesla's EV sales in the first nine months of the year may have exceeded its sales for the entirety of last year.

Tesla, on the other hand, not only reported disappointing deliveries but also underwhelming Q3 global sales driven by factory upgrades and soft consumer demand. It's worth mentioning that Tesla's lackluster performance comes against the backdrop of the company's efforts to lower vehicle prices this year in order to appeal to customers. As such, perhaps unsurprisingly, some analysts posit that BYD “is poised to overtake Tesla Inc. as the world’s biggest sellers of electric vehicles.” (Source:Yahoo Finance)

Overall, however, despite the dreary figures, since the beginning of the year and as of the time of the writing, Tesla rose 132.6%. 

BYD, on the other hand, seems to have had a volatile year and has grown by 18% since the beginning of the year. 

Besides Tesla, another US EV company to have made the headlines on Monday was Rivian (RIVN). However, unlike Tesla, the company reported better-than-expected EV deliveries in Q3. According to reports, Rivian’s deliveries were up by 23% from Q2’s figures.

What’s Next for Tesla & BYD?

To get a better understanding of where Tesla may be heading in the near future and how it actually fared in the past quarter, traders and analysts alike may want to keep track of its upcoming earnings on October 18th, whereby the company is expected to release its full Q3 results. 

Traders may also want to keep in mind the fact that prior to Monday’s release, many market participants were bullish on Tesla’s Q4 outlook. One analyst and Tesla bull, Dan Ives, even stated that he believed Tesla may be entering “the next stage of growth.” Ives attributed this to Telsa's “Model 3 refresh front and center in China and the Cybertruck production” which is due to be launched before Halloween. 

Conversely, last week, Deutsche Bank (DBK.DE) analyst Emmanuel Rosner adopted a more bearish position by lowering Tesla's price target. 

Still, Tesla’s trajectory remains uncertain as its new products as well as macroeconomic conditions, and rising competition always influence its performance in the next couple of months.

Furthermore, during a Q2 earnings call, CEO Elon Musk disclosed a goal of delivering 1.8 million vehicles in 2023. As of September 28, the analyst consensus projects a total of 1.84 million units for the full year. However, whether or not these predictions will be realized is yet to be determined. 

As for BYD, some market participants believe that “BYD will sell more fully electric passenger vehicles than Tesla in the fourth quarter.” One Bloomberg analyst, Joanne Chen, believes that growing exports could be “a key volume driver next year as BYD expands its global presence with more new EVs.” Still, nothing is for sure when it comes to the markets.

Chinese EV Industry Shines

Besides Tesla, it seems that the Chinese EV industry enjoyed a much-needed boost in September as sales from companies like XPeng (XPEV) and NIO (NIO) surged. In addition, these companies’ deliveries skyrocketed as well.

Accordingly,  XPeng reported that it delivered 15,310 Smart EVs in September, which is 81% YoY, while NIO reported 15,641 EV deliveries which is 44% YoY. This, as a result, indicated that the Chinese EV market is booming despite China’s economic slowdown and hurdles. 

Interestingly, China is positioned in the global top five for the adoption of EVs, as more than a fifth of its car sales consist of fully electric vehicles. Additionally, China is a strong player in the lithium-ion battery supply chain. Hence, this may explain EVs’ rising popularity and success there.

What’s Next for China’s EV Stocks?

Despite the rosy outlook and performance, some note that the Chinese EV industry still has some challenges to tackle. 

It seems that Chinese EV makers are under increased regulatory scrutiny overseas, especially in Europe and the US, where policymakers aim to safeguard their domestic industries. Evidently, EU regulators initiated an investigation into state subsidies for Chinese EV manufacturers last month with the intention of safeguarding European automakers such as Volkswagen (VOW.DE) and Mercedes-Benz (MBG.DE). 

Therefore, how China’s growing EV industry will face these regulatory hurdles is still unknown. 

Conclusion 

The EV sector has garnered significant attention lately, marked by a mix of favorable and unfavorable developments. Tesla, for instance, has reported results that fell short of expectations, whereas other companies like BYD, NIO, and XPeng have exceeded predictions. 

Against the backdrop of influential economic factors from the United States and China shaping consumer expenditure and a heightened sense of market uncertainty, the trajectory of the EV industry remains uncertain.