I bought BYD stock in 2025 before split in the hope that their market dominance will translate to great returns. The stock has pretty consistently traded down since then. Meanwhile Tesla stock soared purely on the air coming out of Elon’s mouth.
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Auto manufacturing is low margin and capital intensive. BYD is valued as an auto manufacturer. Tesla is not.
Even all of that aside, the idea that foreign investors will be allowed to meaningfully participate in the upside of Chinese companies is questionable. Every Chinese company is one recapitalization away from zeroing out the common stock owned by foreigners. What are they gonna do, sue in Chinese court?
For quite some time, Warren Buffett was a BYD investor via Berkshire Hathaway. If you tried to get into EV stocks after the Tesla exuberance started, you were already mostly too late.
> The filing by Berkshire’s energy subsidiary recorded the value of its BYD investment as zero as of the end of March, down from $415 million at the end of 2024.
> Buffett’s company began investing in Shenzhen-based BYD in 2008, when it paid $230 million for about 225 million shares, equivalent to a 10% stake at the time.
> It began selling those shares in 2022 after BYD’s share price had risen more than twentyfold.
Warren Buffett’s fund exits BYD after a 17-year investment that grew over 20-fold in value - https://www.cnn.com/2025/09/22/investing/warren-buffet-berks... - September 22nd, 2025
> Every Chinese company is one recapitalization away from zeroing out the common stock owned by foreigners.
But in practice, wouldn't such an event on X large Chinese company have a cascade effect on stock values of all other Chinese companies?
Isn't BYD a VIE? Most "internet" (ie tech) companies in China cannot legally be owned by foreigners. And what you get is some proxy based in the Cayman Islands that is circumventing Chinese law. Not something I'd touch with a ten foot pole.
> BYD is valued as an auto manufacturer. Tesla is not.
This in no way addresses the accusation that Teslas valuation is built on nothing. BYD also has self driving software. So what exactly does Tesla have that is not cars and batteries?
The ludicrous humanoid robots with dubious use cases? That’s not it either because the stock was absurdly high before that was a thing.
I have never seen a better example of how arbitrary and irrational markets are than Teslas valuation.
> What are they gonna do, sue in Chinese court?
If your hypothetical happens, yes. China has been working hard to turn domestic investment away from housing. A trustworthy domestic stock market is key.
> Every Chinese company is one recapitalization away from zeroing out the common stock owned by foreigners
See TikTok as an example.
The future of the Chinese economy depends on being able to access the global capital markets, which means that by extension, its future depends on foreign investors being demonstrably "allowed to meaningfully participate in the upside of Chinese companies".
In the combination Keynesian Beauty Contest[1] and casino that passes for an equity market in the US, everyone knows that Tesla is ugly as hell, but everyone also knows that everyone knows that it will get votes, so the show goes on.
Only works until it doesn't.
What do you mean by 'everyone'? Tesla usually has quite a bit of short interest.
This is the story of nearly every Chinese stock ever. Their market is very different and even simple intuitions don't carry over.
Anytime China targets an industry we get a situation where basically every major city has their own brand that they're backing. There's a lot more competition in China compared to western markets that tend to be dominated by a few major players. There's over 100 EV brands in China today, e.g. BYD (Shenzhen), NIO (Hefei), GAC Aion (Guangzhou), and SAIC (Shanghai)
There's been a lot written about China's "Fiscal Federalism"
https://www.sciencedirect.com/science/article/abs/pii/S01475...
I am a China perma bull and a panda hugger but most of my money is in the US.
US capital is the completely dominant center of global capital and it will be so for decades to come. Ultimately this will flip too as China becomes the global economic center but I am not quite sure what it will look like and I don't assume the process of capital allocation will be exactly the same as it is today in the US-system (there may be more state directed investment, more bank lending, perhaps less public speculation, or even novel financial structures).
That said - Chinese stocks had a good year in 2025 and are currently on a run - and there is certainly a lot of value there.
I like this quote from Dan Wang's 2025 letter:
> Part of the reason that China’s stock market trends sideways is that everyone’s profits are competed away. Big Tech might enjoy the monopolistic success smiled upon by Peter Thiel, coming almost to genteel agreements not to tread too hard upon each other’s business lines. Chinese firms have to fight it out in a rough-and-tumble environment, expanding all the time into each other’s core businesses, taking Jeff “your margin is my opportunity” Bezos with seriousness.
Is that a fancy way of saying “communist” China has real, authentic capitalism and “capitalist” US has monopolies all over?
BYD does not make most of its revenue on BEVs. It is mostly batteries and more plugin hybrids than BEVs and they lose money selling BEVs (less than almost all other electric car makers though). Tesla make only BEVs and make a profit doing so (the only? large maker to consistently do so).
I believe Tesla's profits are from carbon credits, not vehicle sales.
Tesla was only profitable the last few quarters due to selling their carbon credits to other companies. They'd have lost money otherwise. And since Trump basically did away with that, Tesla is no longer a profitable company now.
Can you even own Chinese stock as a foreigner? I thought Chinese 'stock' was essentially 'IOU's held by a foreign third party who holds it on your behalf. I would not trust a significant amount of money to such a scheme.
it’s not very hard to trade directly on the hong kong stock exchange.
https://www.investasian.com/stock-market/hong-kong-brokerage...
"The market can stay irrational longer than you can stay solvent."
But as another comment pointed out, they have tons of debt, and TFA states that their "revised" target was revised downward, meaning earlier stock valuations were priced for higher sales.
Chinese stock market is very different than US. In US you have like 62% of Americans reporting owning stock (including via mutual funds/retirement accounts) and in China, it's single digits participation.
And China's market is famously retail heavy one, there were some studies showing that Shanghai Stock Exchange retail trading is 80%+ of volume vs ~10% in the US.
There is less hype and they are also not affected as much as US if stock goes down or stays flat.
The Shanghai stock exchange is still too heavy on insider trading, and consumer investors feel it is more like gambling than investing. Like, you could wager some money on a mahjong game, or you could blindly pick a stock and hope you can get some money by riding in the wake of a connected insider trader.
If you just want to invest money, there is real estate or investing in a family member’s business. Pensions and other institutions in need of safe (in aggregate) investments won’t go near the SSE yet.
China is doing more things right but still has a long way to go on other things.
Chinese stocks don’t seem to follow any reality either. BYD is basically flat over 5 years.
The explanation that I'm finding more and more compelling is that this is because there's actual competition in China, whereas in the west conglomerates have been able to carve up the market into fiefdoms and feast, with increasing amounts of cash that they can funnel into dividends and buybacks.
From the NA vehicle POV it doesn't look healthy. Stocks of the major auto makers have done well this year, while product gets more and more expensive and limited. Barely seems possible to buy anything but a F150like anymore.
I know little about stocks, but I've heard China doesn't allow shorting stocks and many other "advanced" stock products/instruments. You can buy, sell and trade stocks, and nothing else. They also audit to ensure stocks are not oversold/traded (e.g.: selling stock you don’t own in the hopes you’ll obtain some in time to fulfil an order).
Maybe that's why they behave differently?
You could say that about the Chinese stock market in general. Neither the SSE Composite nor the Hang Seng correlate all that well with Chinese GDP growth.
Chinese companies are optimized to grow and build stuff. US companies are optimized to deliver returns to shareholders.
“The market can stay irrational longer than you can stay solvent.”
Also, their market position has already been factored in by market participants with multiple orders of magnitude greater capital and access to information about the company than you do. Thats not to say the market valuation is accurate, but it does mean that you guessing which way the market has mis-valued the stock is a coin flip.
No AI, self driving hype in BYD
BYD's self-driving is free and much more widely available. Not to mention it uses LiDAR. I'm not gonna get into whether or not their God's Eye is better or worse than Tesla's FSD but it's at least widely acknowledged that they are at least comparable.
Tesla is also not very transparent so it's hard to cite statistics but a recent study found that Tesla had the highest rate of fatal accidents of any brand in the US
Stock prices are forward looking.
You bought BYD after it had been hyped to the moon. Of course the price doesn’t move when it meets sales expectations.
Yeah, and if you have decent eyesight you can look forward even further to see the bubble popping.
One of the things that got him in trouble with the authorities was publicly stating that he thought Tesla stock is overvalued.
your very mistake was trading stocks at all
stocks and the whole money-as-a-business is US thing - making actual product is the China thing
For the major part BYD sales performance is dependent on government subsidies in the country where they sell three quarters of all the cars they produce. That is a high risk factor investors don't like.
Can you provide a source for the government subsidies you say BYD is dependent on?
It’s stock manipulation.
My guess is that Tesla is doing better because FSD has improved significantly over the past few months. Even with that, most of the recent increase has been them regaining the valuation they lost earlier this year.
Talking about FSD has increased, nothing more.
There is still the law suite about FSD and the old hardware.
There is still Elon the hitler Musk Oligarch who wielded a chainsaw.
There were plenty of FSD videos last year and the year before showing that FSD is working. The question is still, is it working good enough, and what will be the business of a robotaxi.
The Taxi market overall is not that big, competition is hard and the most critical thing is peak demand.
In parallel random people believe tesla will wipe out the whole taxi industry + private cars tomorrow. Ignoring competition and everything else.
Aaand as an edit: When it finally works, people will tell you "told you so look at it, FSD works" yeah really? Of course it works but it was promised from Musk that 2020 all these Teslas will drive autonomsly. Its 2026
Source?
I could give you many reasons. I see where you went wrong, here are some to think about:
- next time don't just look at stock value and volume. Look at cashflow
- Consider that most investment volume comes from institutional investors in Wall Street, not in China. Even Chinese investment is routed through NY, Singapore, UK, etc, with the slight exception of Hong Kong.
- Consider geopolitics before investing too. Trump really went all-in in tariffs that basically geofence EV business to american brands.
- The hope for BYD is in EU and UK markets. EU has also been extremely harsh to welcoming BYD and protectionist of their (German) auto makers. This hasn't avoided BYD entering the market, but also has stopped them from shipping en masse. Might change.
- BYD is not a competitor to Tesla. BYD market is the low end market mostly. For example, what today in EU is Dacia (1st or 2nd best seller by number of units). Tesla on the other hand is purposely set up as a mid-high seller. It is too expensive for the cheap segment of the market (10-20k) and is well below luxury vehicles. Different market segment, also better margins in that segment.
- Auto industry is cyclical not defensive. In times of economic uncertainty like today, if you want a solid investment you should look at defensive not cyclical.
- Generally it is a bad idea for retailers to invest in Chinese HQed companies due to the complex geopolitics that surrounding the stock. For example, you have severe limitations in stock market products and they have tight regulation, unlike the US where you have a free-market.
- Consider the market of derivatives. Very different market of futures in China vs the US.
- Tesla is also a self-driving company and robotics company. It would be better compared to XPENG than to BYD.
- Tesla owns the EV market in North America. Period. This is the reality today.
- On top of all that yes the stock is hyped up. But you should know that and invest with that in mind. Being full blown rational in an irrational market will not work.
The Chinese economy isn't set up to endlessly create value for the capital-owning class, so you are never going to profit off of Chinese companies and stocks in the way we are used to in the west.
it make sense with geo politics, governments started slowly using same playbook, banning chinese cars anywere possible because of real risks of espionage etc.
> Meanwhile Tesla stock soared purely on the air coming out of Elon’s mouth.
Wrong orifice.
> I bought BYD stock in 2025 before split in the hope that their market dominance will translate to great returns. The stock has pretty consistently traded down since then. Meanwhile Tesla stock soared purely on the air coming out of Elon’s mouth.
Interesting take there. Tesla Model Y is the #1 best-selling car globally in 2025 for the third year.
Meanwhile, your BYD is bleeding from real price wars and demand slumps. Tesla's valuation? Still baked in autonomy, energy, and AI upside not just car volume. Calling it "air" while hyping your own wishful dominance is nothing but peak projection.
Purely on the air coming out of Elon’s mouth as well as the 1 million cars sold world wide, 165 successful Falcon 9 launches and 9 million Starlink subscriptions