Tesla, BYD, and Honda: July 2024’s Automobile Stocks Update

Automobile giants Tesla (TSLA), BYD (1211. HK), and Honda (7267. TY) have made the headlines this week for various reasons, providing market watchers with some needed news and updates about the state of EV stocks and the automobile industry as a whole. 

Let’s dive into the recent updates:

Tesla’s Winning Streak: Why Is the EV Giant Soaring?

American electric vehicle leader Tesla was on a winning streak for nine consecutive days from last week until Monday, July 8. This may have come as much-needed news for Tesla traders, especially given that the company erased about 20.5% of its value in the year's first half as competition arose and EV demand dwindled.

The gains seem derived from data revealing that Tesla’s quarterly deliveries beat Wall Street projections. Whereas Wall Street analysts predicted a delivery of 439,302 vehicles, last week’s data showed that Tesla delivered 443,956 in Q2. 

Interestingly, in addition to Tesla, it was recently revealed that other EV makers like Lucid (LCID), NIO (NIO), Li Auto (LI), and XPeng (XPEV) reported better-than-expected deliveries, potentially signalling a rebound for the EV sector. 

Nonetheless, some analysts note that “there is still the risk of further price cuts, and there [are] still further questions on fundamentals; we are still facing somewhat of an EV winter on demand. In other words, the coast is still not clear for Tesla.

However, beyond Tesla’s role in the automotive industry, some recognise it as a critical artificial intelligence (AI) player. Additionally, many expect the company to unveil the redesign of its popular SUV, the Model Y, which was a best-selling car worldwide last year. Therefore, seeing whether this can boost its stock will be interesting.

Honda’s Production Cuts: What Does This Mean?

While Tesla’s recent updates may have been positive, Honda, Japan’s second-biggest automaker, released less-than-rosy news. The company announced today, Tuesday, 9 July, that it will stop producing vehicles in its Thai factory (in Ayutthaya) by 2025. 

The news comes against the backdrop of a generally challenging atmosphere for the company, marked by rising competition from Chinese rivals and lower sales in Thailand. 

Moreover, according to data, Honda’s sales in the country were below 100,000 over the past four years. 

Despite the latest news, Honda has gained about 13.9% of its value since the start of the year and as of the time of the writing. Whether this company will be able to sustain these gains is yet to be determined. (Source: Yahoo Finance)

BYD: Chinese EV-Maker on the Rise?

As noted above, Chinese EV makers have intensified competition, and BYD is no exception. 

On Monday,8 July, it was announced that BYD will open a $1 billion EV factory in Turkey, further escalating the rivalry with European and American automotive companies like Tesla, whose costs are generally higher. 

The new factory will enable BYD to manufacture 150,000 EVs annually and feature a research and development (R&D) centre.

This expansion is significant for BYD, which has primarily sold its vehicles in China, as it continues to grow its presence in Europe, where it first began selling in 2021. 

Notably, BYD has gained 13.2% since the beginning of the year. It will be interesting to observe how the new Turkish factory will impact the company's performance in the future.

Conclusion

The automotive industry has been in the spotlight recently, and leading companies like Tesla, BYD, and Honda made waves this week.

While Tesla has regained some of its strength in the past few days, BYD has revealed news that could challenge that and increase market competition. On the flip side, Honda is tackling some issues, prompting it to close one of its factories in Thailand as rivalry arose and intensified. 

What the future looks like for the ever-growing automotive sector, in general, and the EV market, in particular, might be a question on many people’s minds. Only time will tell.