MW BYD is offering a self-driving feature for all. That could be trouble for Tesla.

By Barbara Kollmeyer

Oppenheimer cuts estimates on Tesla, citing CEO Elon Musk's distracting OpenAI bid

In a potential challenge to electric-vehicle makers such as Tesla Inc., China's BYD Co. announced that its "God's Eye" self-driving technology will be installed in most of its cars without additional cost, including some of the cheaper models.

The announcement came from BYD's (HK:1211) Chairman Wang Chuanfu at an event in Shenzhen on Monday. He said, "2025 will be the first year of intelligent driving for all," predicting the self-driving feature will become something as normal as seat belts within three years, according to media reports.

BYD shares rose to an all-time intraday high in overseas trading before backing off, and closing down 0.7%. Stock of rival XPeng Inc. $(XPEV)$ dropped 9% in Asian trade, while U.S.-listed shares of NIO Inc. $(NIO)$ dropped 2.3%. Tesla stock $(TSLA)$ fell 0.9% in premarket trading toward a fifth-straight decline.

"BYD has made a 180-degree U-turn in AD [autonomous driving] with BYD's chairman Mr. Wang redefining its company strategy on intelligent driving over the next few years," said a team of Jefferies analysts led by Johnson Wan, commenting on BYD's "smart driving for all" strategy.

UBS analysts were equally dazzled. "This could be a game changer, particularly in the affordable segment. Offering a state-of-the-art L2+ ADAS system without raising prices could increase BYD's competitive edge over legacy competitors and hereby add to the pricing pressure on their products. We think next to Tesla, Volkswagen is potentially most negatively affected by BYD's move," said a team led by Patrick Hummel, in a note to clients.

BYD had previously offered self-driving technology to cars costing $30,000 and higher, but analysts noted that will now be offered on 21 models, including some under $10,000. Tesla's full self-driving technology is optional for all its cars, at a price, though the company has lowered those costs over the past couple of years.

UBS analysts believe that BYD's latest announcement will only increase market share losses of global OEMs in China. "Last year, the share of domestic OEMs increased from 59% to 66%, and we expect it to surpass the 70% mark this year," Hummel and his team added.

Tesla $(TSLA.UK)$ has been struggling in foreign markets, with sales down 11% in January in China as market leader BYD's jumped 48%.

Shares of Tesla are off 13% year to date, and the worst performer among the mega-technology companies known as the Magnificent Seven. Still, over the past 12 months, the stock is up 81%.

Tesla has other homegrown issues, such as investors who are growing increasingly wary around incentives for EVs in the U.S. under President Trump's administration. A Stifel analyst on Monday cut his price target, citing worries Chief Executive Elon Musk's political activity could turn some consumers against Tesla cars.

On Tuesday, Oppenheimer trimmed estimates on Tesla deliveries for 2025 by 20,000 cars and for 2026 by 28,000 cars. It also lowered the estimate for 2025 revenue to $99.8 billion from $101.1 billion and for adjusted earnings per share to $1.58 from $1.63.

A team of analysts led by Colin Rusch also cited potential alienation of some consumers over Musk's political activity, along with the executive's bid with a group of investors to take control of Open AI. They said that was a "distraction from Tesla's challenges, and noted weak California and global sales trends for Tesla.

"We don't expect any meaningful discussions to develop [over Open AI]. However, we see increasing risks to Street estimates for [Tesla] as EV and AV competition intensifies," said Rusch and his team.

-Barbara Kollmeyer

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February 11, 2025 08:29 ET (13:29 GMT)

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