“I don’t follow BYD” – that’s what Elon Musk said in a recent interview with CNBC.
The billionaire chief executive of Tesla Inc (NASDAQ: TSLA) also went on to state that he doesn’t think about competitors at all.
His entire focus is solely on making the TSLA product as perfect as humanly possible.
While the aforementioned comment reflects Musk’s commitment to innovation, ignoring rivals, particularly BYD, could prove a misstep on his part.
Here’s why.
BYD’s market dominance
BYD has already surpassed Tesla Inc to become the world’s largest seller of electric vehicles – and that’s when it doesn’t even sell its vehicles in the world’s second-largest auto market, the US.
While the multinational based out of Austin, Texas, was once the undisputed leader in the EV space, BYD’s rapid expansion, including the assembly lines it has already established in Brazil, Hungary, Thailand, and Uzbekistan, signals its intent to dominate globally.
Elon Musk himself acknowledged recently that without trade barriers, BYD could “demolish most other car companies.”
So, if Tesla doesn’t track BYD’s moves, it could end up losing ground in key markets.
BYD’s cost advantage
BYD’s ability to produce EVs at significantly lower costs is a major threat to Tesla Inc.
In fact, experts are now convinced that “no one can match BYD on price, period.”
Tesla’s premium pricing strategy works in some markets, but affordability is a key driver of mass adoption.
Therefore, if the US electric vehicles behemoth doesn’t analyse BYD’s cost-saving strategies, it may struggle to compete in price-sensitive regions.
That’s part of the reason why TSLA is already finding it incrementally more difficult to expand its share in China, which, according to Elon Musk, is “the most competitive auto market.”
BYD’s technological advancements
BYD has established itself globally as much more than just a budget EV maker with innovations that sometimes seem light years ahead of its rivals.
But if he still ignores BYD’s tech advancements, TSLA risks being blindsided by innovations that could redefine the market.
Plus, BYD is offering multiple levels of autonomy on its vehicles for a fraction of the cost compared to Tesla, and its latest charging technology claims to charge an EV in less than 5 minutes, versus 15 minutes for TSLA.
Note that analysts are already losing faith in Tesla stock, given the consensus rating currently sits at “hold,” with the average price target indicating potential downside of nearly 20% from here.
China’s EV dominance
Finally, China is the world’s largest EV market, and BYD benefits from solid government support.
Between 2015 and 2020, BYD received $4.3 billion in state subsidies.
Tesla must monitor how BYD leverages this advantage to expand globally.
So, ignoring BYD or not following it, as Musk claimed in a CNBC interview today, is not an option.
The billionaire must track its strategies, pricing, and innovations to ensure Tesla Inc remains competitive in the evolving EV landscape.
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