An ‘Extended Tariff Scenario' Would Hurt Tesla and Help This 1 Key Electric Vehicle Rival
Tariffs are once again at the center of a growing economic storm, and this time, analysts are worried they will hurt the electric vehicle industry.
President Donald Trump has now set an effective 125% tariff on Chinese imports, threatening to impact global supply chains and raising market uncertainty. Analysts warn that these tariffs, if in place for an 'extended' period, may disrupt supply chains, increase production costs, and significantly burden American automakers like Tesla (TSLA).
Wedbush Securities analyst Dan Ives emphasizes that such tariffs threaten Tesla's profitability and could shift Chinese consumer preferences away from U.S. brands burdened by steep import costs.
But where Tesla faces challenges, China's BYD (BYDDY) sees opportunity. With its vertically integrated production model and groundbreaking innovations like five-minute charging and a competitive price point, BYD is poised to benefit from tariffs that widen the cost gap between American and Chinese vehicles.
Even without a U.S. presence, BYD's strategic advantages make it well-positioned for growth. Analysts are increasingly bullish on BYD, predicting that prolonged tariffs against China could speed up its global expansion, especially in Europe, Mexico, and South America.
About BYD Stock
BYD has become a global leader in electric vehicles and renewable energy solutions. BYDDY stock has delivered extraordinary returns in the past few years, rallying 63% over the past 52 weeks alone.
BYD vs. Tesla
For years, Tesla has been the undisputed leader in electric vehicles, but BYD is quickly challenging that dominance. In the fourth quarter of 2023, BYD outsold Tesla in battery EVs, and by Q1 2025, it delivered over 416,000 all-electric vehicles, surpassing Tesla's nearly 337,000. This marks the second consecutive quarter that BYD has led globally, signaling a significant shift in the market.
BYD's momentum continues as it surpassed a major revenue milestone, reaching over $100 billion in 2024, outpacing Tesla's performance.
With full control over its supply chain, from batteries to semiconductors, BYD holds significant pricing power and strong margins. In contrast, Tesla faces challenges with an aging product lineup and slower demand. With projected Q1 net income of $1.3 billion, BYD seems poised to surpass Tesla and reshape the EV landscape.
BYD Delivered Strong Q4 Results
In Q4 2024, BYD posted a record net income of $2.07 billion, marking a staggering 73% year-over-year jump. The surge was fueled by new energy vehicle (NEV) sales that hit an all-time high, with the company moving 1.52 million units, an impressive 161% increase on a year-over-year basis. This record-breaking performance helped drive revenue to a new peak of $37.89 billion, marking a 53% year-over-year increase.
However, alongside these stellar top=line numbers, there were signs of caution. BYD's gross margin in the fourth quarter slipped to 17%, down 4.8% from the third quarter. This decline was partly due to rising operating costs, exacerbated by an adjustment in accounting practices that now includes increased sales expenses.
The company expects to report net income of $1.3 billion for Q1 at the midpoint.
Analysts Ratings on BYD Stock
Analysts are confident in BYD's future growth prospects. Recently, Jefferies reiterated a 'Buy' rating on BYD with a price target of 447 Hong Kong dollars, citing strong Q1 earnings growth of 86%-119% year-over-year. The analysts also highlighted robust NEV sales, cost efficiencies, and rising export volumes.
Overall, all 6 Wall Street analysts tracked by Barchart rate BYD a unanimous ' Strong Buy.' The average 12-month price target of $123 suggests more than 40% potential upside from the current price.
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