Tesla Rival Turns Heads With $107 Billion Report as Markets Brace for Tariff Blow

Chinese tech stocks continue to move in opposite directions to their U.S. tech counterparts. Today, that sees selling in Hong Kong in particular, partly on the back of a big secondary-share sale.

But the Hong Kong rally has been the strongest in the world so far this year, a rally U.S. investors risk missing, with China tech benefitting from a rotation away from Wall Street and into the downtrodden Hang Seng. At the start of this year, the Hong Kong benchmark was essentially at the same level as it started this century.

Sell the News

It’s a case of selling the news for Chinese car stocks today, after BYD BYDDY (HK:1211) reported full-year sales that saw it post C¥777 billion ($107 billion) in revenue for 2024. You can find its filing here.

That marks the first time BYD has cleared $100 billion in sales. Revenue rose 29.0% and net profit climbed 34.0%.

Amid after-earnings selling, BYD shares are down 3.5% on Tuesday, but nevertheless 50.7% higher for 2025. They have moved in polar opposite to Telsa TSLA, which had a strong day on Monday, up 11.9% to snap a series of losses. But Tesla shares are down 26.6% in 2025, the weakest of the “Magnificent Seven.”

BYD’s sales move it past Tesla, which posted $97.7 billion in revenue for 2024. Tesla’s sales were essentially flat last year, a 0.95% increase from the prior year.

We’ve just heard word that Tesla sales are down 44% in Europe for February, year-on-year, similar to the decline for January, according to figure from market-research tracker Jato Dynamics. BYD sales leapt 94%, although its 4,436 vehicles sold still lags the 15,737 vehicles Tesla sold in Europe, good for second place behind market leader Volkswagen, which almost tripled sales to 19,565 models, up 180%.

Still, the sales figures are a concern at a time Tesla’s sales in China are also falling. After a strong 2024, figures for February show its sales in China dropped 49.2% in February. And yes, BYD saw unit sales in China (mainly of cheaper models) rise 90.4%.

EVs as Cheap as $10,000

Tariff concerns are moving Asian markets the week before the April 2 deadline for a threatened increase in U.S. import duties. But good luck guessing correctly what shape or form they will take, or what kinds of exemptions U.S. trade partners can negotiate.

BYD is now the world’s largest maker of electric vehicles (EVs), with a mix of both pure-play EVs and hybrids, and models that sell for less than $10,000 on up to a supercar, the Yangwang U9, that starts at $230,000. Even at that price, the supercar offers a hefty discount on mainly European rivals that cost some $2 million.

BYD and Xiaomi XIACY (HK:1810), the mobile phone maker now making big inroads with its EV range, have both taken the run up in Hong Kong stocks as an opportunity to raise more cash with secondary placements. The dilutive moves temporarily dent the stocks, but will result in a war chest of cash for future expansion.

Xiaomi shares are among the biggest decliners on the Hang Seng Tech Index, down 6.3% on the day. But its 2025 performance is similar to BYD, Xiaomi shares up 57.1% in Hong Kong trade for the year. The smartphone maker has seen strong presales of its SU7 Ultra performance sedan, an EV that released with the base SU7 last year and goes directly up against Tesla’s models.

Xiaomi, in an announcement on Tuesday, says it raised HK$42.6 billion ($5.9 billion) selling shares at HK$53.25 in a secondary placement. There are full details here. The secondary came at a 6.6% discount to Monday’s close, and sure enough, the stock finished Tuesday at HK$53.40.

Carbon Copy Offer

BYD shares moved in a similar pattern earlier this month when it raised a similar amount, HK$43.5 billion (US$5.6 billion), with a secondary placement in Hong Kong exactly three weeks ago. Its shares fell 6.8% on Tuesday, March 4, as it sold stock at a 7.8% discount to its close the day before.

Those are the largest stock offerings in Hong Kong since 2021, when grocery app operator Meituan MPNGY (HK:3690) raised $10 billion in a stock and bond offering. Many companies had shelved plans to list or issue more shares in Hong Kong due to the Hang Seng’s persistent problems since then, until the sudden change in sentiment this year.

BYD shares have moved 14.8% higher since the secondary. It took about 10 trading days for the market to absorb the added liquidity, and the discount, before the EV maker moved higher. Of course that was in a strong market.

All the Hong Kong-listed EV makers are down today. Nio NIO (HK:9866) drifted 2.6%, BYD fell 3.5%, Li Auto LI (HK:2015) dropped 4.9% and XPeng XPEV (HK:9868) suffered the strongest selling, down 7.5% for the day.

I should note I have a long position in BYD, Li Auto and XPeng. I’ve also noted that U.S. investors can easily play the Hong Kong tech story via the KraneShares Hang Seng Tech Index ETF KTEC, which we can expect to fall today in U.S. trade, after that index fell 3.8% in Hong Kong for Tuesday.

'Meaningful Correction Soon'

There are doubts about how much further Chinese shares have to run. Bank of America Securities warned last week that China stocks may see a “meaningful correction soon,” given the similarity between this rally and the run up in 2015. The Hang Seng jumped more than 20% in short order before correcting by one-third, with Hong Kong-listed China stocks often seeing even more dramatic swings.

BofA’s analysts cited a trip to Shanghai that revealed investor nervousness over the strength of the legs in this run up. As I’ve noted before, there’s a lot of geopolitical uncertainty, with this rally spurred first by Beijing’s pledge of fiscal support for the economy, and buoyed by subsequent promises (so far, generally unfulfilled) to stimulate consumer spending.

I believe the China rally has been supported by a rotation away from U.S. big tech. It’s likely Hong Kong and Wall Street will continue to move in opposite directions as the uncertainty surrounding U.S. tariffs — and their impact on both the Chinese and U.S. economies — continues to play out.

At the time of publication, McMillan was long BYD, LI and XPEV.