Tesla is the best-performing auto stock this year, but it’s also given a boost to the handful of other electric carmakers across the globe.
Elon Musk’s firm is up around 112% year-to-date, after a monster rally in the past few days. Chinese electric vehicle (EV) firms NIO and BYD, both listed in the U.S., are up over 12% and 27.5% respectively so far in 2020.
Tesla is the biggest carmaker out of the these firms based on deliveries of electric vehicles. In 2019, the U.S. firm delivered approximately 367,500 cars. In comparison, BYD delivered 229,506 electric vehicles. The company still sells fuel-based models. NIO has not released its 2019 numbers yet, but it is likely to be smaller than Tesla and BYD.
“A major part of the eye popping Tesla rally is around an inflection in EV demand for China,” Daniel Ives, managing director of equity research at Wedbush Securities, told CNBC on Wednesday.
“China EV demand is starting to inflect, which is worth $300 to Tesla’s stock in our opinion, and a huge catalyst and tailwinds for domestic Chinese EV players like NIO and BYD.”
China is one of the biggest electric car markets in the world. In the past few years, the industry has been supported by government subsidies which has helped boost sales. But that support has slowly been reduced and in 2019 electric vehicle sales fell 4% year-on-year, according to data from the China Association of Automobile Manufacturers.
“Understandably, at current levels, investors are comparing Tesla’s valuation to tech stocks rather than auto stocks ... Tesla’s market cap is rapidly approaching that of Toyota and is more than 5x the market cap of Ford,” Morgan Stanley analysts said in a note on Wednesday.
Traditional automakers haven’t fared as well during the same period. Ford is down around 1.3% year-to-date following a big plunge in shares on Tuesday after disappointing earnings. General Motors is around 6% lower this year.
Europe’s Daimler and BMW are down 12% and 9.6% year-to-date, respectively. Volkswagen’s Frankfurt-listed shares are marginally lower for the year so far.
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