Elon Musk’s Tesla tumbles as BYD plans to use DeepSeek
Elon Musk’s Tesla is on a sharp downward spiral, shedding 16 per cent in just over a week after Chinese rival BYD announced plans to develop autonomous vehicles with DeepSeek.
Coming into Wednesday trading, the EV giant dropped for its fifth consecutive day.
Its shares have plummeted 32 per cent since mid-December, when the firm hit record highs of nearly $480 (£385).
What is driving the drop?
This latest slump comes as BYD, China’s leading electric vehicle (EV) maker, announced that it is making self-driving technology standard across almost all of its models, at no extra cost.
The automaker inked a deal with Chinese startup DeepSeek to co-develop this technology.
The tech firm was recently in the spotlight for its AI technology, comparable to OpenAI, which triggered US markets due to its cheaper, quicker model.
This move threatens Tesla’s long term advantage in autonomous driving, which is a key pillar of its robotaxi ambitions.
While BYD’s new driver assistance system is not yet as advanced as Musk’s full self-driving (FSD), analysts see it as a sign that self-driving technology is becoming more widely accessed.
At the same time, “investors are starting to worry Elon’s juggling act is spreading him too thin” said Hargreaves Lansdown’s Matt Britzman.
His recent appointment to the US department of government efficiency (DOGE) and his unsolicited $97bn bid to take over OpenAI have fuelled concerns that he is too distracted to steer Tesla effectively.
“The Tesla brand is broken now” said Ross Gerber, chief executive at Gerber Kawasaki.
Some worry he may even need to sell billions in Tesla stock to finance the OpenAI takeover, which could further depress share prices.
Market sentiment around the car titan has also been hit by falling earnings estimates.
“As the date for its robotaxi rollout inches increasingly closer, I believe the market will likely reassess whether Musk could yet again have overestimated his execution prowess, which could likely continue Tesla’s downward spiral to a more reasonable valuation level before consolidating”, said an investor at TipRanks.
The firm’s fourth quarter results missed expectations, and analysts have cut first quarter earnings 2025 projections by 25 per cent.
Concerns over slowing demand are increasing, with potential buyers holding off purchasing as they anticipate for updated models, or Tesla’s upcoming lower-cost EV.
BYD gains as Tesla slumps
While Tesla shares have slid 13 per cent this year, BYD’s has surged over 20 per cent, briefly hitting an all time high earlier this week.
The Chinese car maker’s ambitious sales target of six million hybrid cars and EVs this year signals its intentions to lead the market.
“BYD is accelerating the commoditisation of self-driving tech”, said Faye Gao, portfolio manager at Lombard Odier Investment Managers.
“It’s a new front in the EV price war”.