Chinese electric vehicle leader BYD has experienced a challenging start to the year, raising questions about whether Tesla will meet Wall Street's expectations for its first-quarter deliveries.
In January, BYD delivered a total of 201,019 passenger vehicles, including 105,304 all-electric vehicles and 95,715 plug-in hybrid models. This marked a significant decline of 41% compared to December 2023. While January is traditionally a slower month for car sales, the drop in 2024 was even steeper than the 36% decline observed in January 2023.
According to a report by Citi analyst Jeff Chung, Chinese car dealers currently have high inventories. As a result, manufacturers have been forced to lower prices in an attempt to clear their lots. Unfortunately, these price cuts have impacted their overall revenue.
Unfortunately, BYD's stock has been negatively affected as well. Although it experienced a slight increase of 0.6% in overseas trading, the shares are down approximately 18% year-to-date. Similarly, NIO stock is down 38%, while XPeng shares have dropped by 43%.
Despite the challenges, Wall Street analysts expect Tesla to deliver around 494,000 units in the first quarter of 2024, surpassing the approximately 485,000 units delivered in the fourth quarter of 2022. However, this may prove to be difficult due to the weak Chinese market. Moreover, Tesla's German assembly plant has also been impacted by shipping disruptions in the Red Sea, further hindering production.
Thursday's trading saw Tesla's stock drop by 25%. The January delivery data only confirmed the concerns surrounding the company.
Nevertheless, similar to BYD stock, Tesla shares showed signs of a rebound on Thursday. The stock experienced an increase of 0.8% during morning trading, while the S&P 500 and Nasdaq Composite saw increases of approximately 0.5% and 0.8%, respectively.
Chung remains optimistic about the Chinese market in 2024, projecting a growth of approximately 16% in battery-electric vehicle sales, totaling around 7 million units. This growth would be accompanied by a 3% increase in the overall Chinese car market. If these projections materialize, battery-electric vehicle models would account for approximately 27% of all car sales in China in 2024, compared to around 24% in 2023.
