BYD stock continues to surge while Tesla stock keeps falling

Key points

• EV maker BYD has seen its stock price rise about 50% YTD.

• Tesla stock was dropping on Tuesday, down 5%.

• Two major Wall Street analysts lowered Tesla's price target.

Tesla stock fell another 5% on Tuesday.

There has been a changing of the guard in the EV industry as Chinese car company BYD (OTC:BYDDY) surpassed Tesla (NASDAQ:TSLA) earlier this year as the largest manufacturer of EVs, according to Statista.

Since then, the two rival EV manufacturers have gone in opposite directions, as BYD stock has soared while Tesla stock has tanked.

BYD was rising again this week after the company introduced a new high-speed charging platform called the Super e-Platform. The Super e-Platform boasts charging speeds of up to 1,000 kilowatts, which would fill up its EVs in 5 minutes and run them for about 250 miles. That is faster than its rivals, including Tesla.

“To completely solve users’ anxiety over charging, our pursuit is to make the charging time for EVs as short as the refueling time for fuel vehicles,” BYD’s founder Wang Chuanfu said, reported the Associated Press (AP).

The supercharging platform will be offered first for BYD’s two new models: the Han L sedan and the Tang L SUV. It plans to build more than 4,000 super-fast charging stations throughout China.

“It’s heartbreaking, suffocating, traumatic, harrowing, agonizing, excruciating, painful for competition, especially the foreign automakers,” Xing Lei, an EV market analyst, wrote on LinkedIn.

In addition to the fast charger news, BYD is looking to expand in Europe, as it plans to open a new plant in Germany, according to Electrek.

BYD stock is up 14% over the past five days and 50% year-to-date, trading at around $103 per share. It has a reasonable, although slightly elevated, valuation with a P/E ratio of 31 and a forward P/E of 23.

Analysts lower Tesla’s price target

Tesla stock, on the other hand, is not just hitting speed bumps, it has stalled out. The stock was down about 5% on Monday and on Tuesday after the opening bell, it remained in freefall, down another 5%.

Since last Friday when it closed at close to $250 per share, it has dropped 10% to around $225 per share. Tesla stock has now dropped about 43% year-to-date.

The latest negative catalyst is news out of Europe and China that sales are plummeting, which has led to analysts dropping their price targets.

This week, Wells Fargo analyst Colin Langan dropped Tesla’s price target to $130 per share, from $135. That would be another 42% drop, on top of the 43% drop it has seen so far this year. Wells Fargo said demand has slowed considerably for Tesla’s, as sales in Europe are down 40% so far this year, reported MSN.

On Tuesday, the catalyst for the price drop was a report from EV publication Electrek that sales are trending lower year-over-year in China in the first quarter.

Wells Fargo is not the only major Wall Street bank to have a bearish view on Tesla stock. Last week, JPMorgan Chase lowered its price target for Tesla to $120 per share – a 47% drop from the current price. JPMorgan analysts estimate that overall deliveries in Q1 will be 20% less than originally projected.

“We struggle to think of anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly,” the firm said of Tesla, reported Inside EVs.

On top of its brand and sales concerns, a major issue for Tesla is that it is still way overvalued, even after this precipitous drop, with a sky high P/E ratio of 116.