BYD Shares Rally 22% As Tesla Dives 23%

The EV business is supposed to be in trouble. U.S. sales have dropped as much as 20% in the first half of the year. Sales in China, the world’s EV capital, dropped 13% in the first half to 4.73 million. The only large market where EVs are doing very well is the EU. And, as is the case with China, the number of competitors is large, which means a battle for market share.

What has become clear in the last month is that the two most visible EV companies have taken different paths. BYD, based in China and the largest EV company in the world, has a stock that has risen 22% during the last month. Tesla’s (NASDAQ: TSLA | TSLA Price Prediction) shares are down 23% over the same period. If the theory is true that the market forecasts a company’s fortunes a year down the road, Tesla’s struggles will continue.

BYD still fights with one hand behind its back. It cannot sell cars in the US because of tariffs. It remains the top-selling EV company in China. However, there are dozens of small competitors, which means pricing pressure. Those small firms desperate to stay in business have little more to boost sales than price cuts.

BYD can make the case that it has cracked the EU market. Registrations of the brand rose 168% in the first half to 130,743. Tesla’s comparable number was an increase of 75% to 124,242. At least Tesla reversed its troubled sales in 2025.

So, what is the problem? There are two. Tesla rules the U.S. EV sector. Fossil fuel challengers like Ford (NYSE: F) and GM (NYSE: GM) have largely left the market. That should fuel market share growth for Elon Musk’s company. However, just offstage is anxiety among investors that at some point, some US President will drop tariffs, probably as part of a larger trade deal with China. The market will be inundated with Chinese EV products. And, without tariffs, BYD could have a significant price advantage.

At the core of the price difference, however, is Elon Musk’s claims that Tesla is an AI and robotics company. Quarter after quarter, signs of that do not appear, and mesmerized shareholders become a little more skeptical. Robotics is far off, and the AI sector is so crowded that it is like an overfull elevator.

BYD shares are up because it is an EV company that can be tracked based on its success in the EV sector. The valuation of Tesla is much more confusing, and that has hurt it.

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