Tesla ‘s had a bad week. Its earnings missed expectations and its shares experienced the biggest drop in over a year. The U.S. electric vehicle giant has been a big investor darling, with its shares doubling in 2023, but the company itself warned of a slowdown in 2024. Kingsley Jones, CIO and founder of boutique advisory firm Jevons Global, isn’t optimistic on the stock right now, thanks to rising competition from Chinese EV makers. He told CNBC Pro Talks on Thursday, “Unless Tesla can really expand their model range … and get their price down … then I think they are going to have a bit of a problem here because China’s going to be really eating away at their market opportunity outside of the U.S.” Tesla will probably face margin pressure in the United States if it doesn’t get both its prices and costs down, Jones added. Prefer BYD to Tesla Jones prefers Tesla’s Chinese EV rival BYD , which he says is his top EV pick. The stock has attractive valuations for its growth rate, Jones said. “This company is vertically integrated, and they control so much of their supply chain, including the batteries. So we think they’re pretty well positioned going forward,” he said. “I haven’t seen anything that would suggest to me that they don’t have sales momentum, business momentum, new model release momentum, and indeed, now export momentum,” Jones said. Earlier in January, data from both companies showed BYD dethroned Tesla in the fourth quarter as the top EV maker globally, and also surpassed Tesla’s production for a second straight year in 2023. BYD is now expanding aggressively overseas after dominating its domestic market in China. Like Tesla, it’s going beyond selling cars and manufacturing its own batteries and other components to stay competitive. Jones’ final word: “I’m a Tesla owner, I don’t own the stock. I own BYD instead, the stock – not the car. So I think that says everything in a way.” Two other EV alternatives Another EV company that Jones likes is Volvo Trucks, a unit under Swedish automaker Volvo . “The reason we like [electric] trucks is that it’s the area where Western manufacturers are still pretty strong,” he said. Volvo has a “very good” truck business, he said, adding: “In particular, they’re making a good transition in terms of electric trucks. So they’re probably one of the leaders in electric trucks worldwide.” He likes its “good business mix” of having sustainable biodiesel trucks and electric and fuel cell ones, he said. Finally, Jones flagged Chinese EV maker Nio as being “one of the leaders” in the highly competitive Chinese EV industry. He noted that it’s posting good sales numbers both domestically and overseas, and “worth having a good close look at.”
