The rise of artificial intelligence (AI) has propelled self-driving cars from a futuristic dream to a fast-approaching reality, with automakers locked in a high-stakes race to dominate this transformative space. As demand for autonomous vehicles (AVs) accelerates, industry projections paint an eye-popping picture, forecasting the global market to surge past a staggering $2.3 trillion by 2030. While this unprecedented growth creates fertile ground for multiple players, for many investors, one name often stands out, which is Tesla (TSLA).

Led by Elon Musk, Tesla has long been synonymous with cutting-edge electric and autonomous vehicle technology. Yet interestingly, the electric vehicle (EV) giant’s biggest rival in China, BYD Company (BYDDY), appears to be shaking up the industry with a game-changing move. The Chinese EV maker’s Chairman, Wang Chuanfu, recently dropped an announcement revealing that the company’s cutting-edge “God’s Eye” self-driving technology will be integrated into most of its vehicles without any additional cost.

This also extends to some of its affordable vehicles, making autonomous driving more accessible to the masses. So, as both Tesla and BYD remain locked in a battle for self-driving car supremacy, let’s take a closer look at both these names to uncover which automaker might be a superior investment candidate now.

The Case for Tesla Stock

Texas-based Tesla (TSLA) has not only dominated the U.S. EV market, but has also positioned itself as a powerhouse across multiple high-growth industries. From redefining energy storage to pushing the boundaries of automation and robotics, the Elon Musk-led company’s vision extends far beyond the road. Since its IPO in 2010, the company has experienced explosive growth, earning its place among the elite “Magnificent 7” tech giants. Presently commanding a market cap of nearly $1.1 trillion, Tesla has soared ahead of several legacy automakers that once dominated the industry.

The EV maker’s late-2024 rally, fueled by CEO Elon Musk’s close ties to President Donald Trump, hit a roadblock earlier this month as January car registration data revealed a drop in registrations in a few key regions in Europe. This decline in popularity, coupled with mounting criticism from some European leaders over Musk’s polarizing political stance, appears to be weighing on the brand, eroding investor confidence and denting Tesla’s foothold in key international markets.

Nevertheless, even after entering a negative territory on a YTD basis, slipping roughly 12.8% so far in 2025, TSLA stock is still up nearly 91% over the past year, which surpasses the broader S&P 500 Index’s ($SPX) 20.5% return during the same time frame. 

Tesla unveiled its fourth-quarter earnings report on Jan. 29, which came in below both Wall Street’s top- and bottom-line predictions. While the company saw modest 2% year-over-year revenue growth, reaching $25.7 billion, it fell short of the forecast figure of $27.1 billion. Adjusted EPS of $0.73 showed a 3% annual gain but still missed the target by around 4.8%. Tesla’s latest earnings report reveals impressive strides in several key areas, with energy generation and storage revenue soaring by a remarkable 113% year-over-year and services revenue growing by a robust 31%.

Yet, the company’s core automotive division saw a dip, with revenue slipping 8%, falling to $19.8 billion from $21.6 billion in the same quarter last year. Tesla pointed to lower average selling prices across its popular Model 3, Model Y, Model S, and Model X vehicles as the primary cause of the decline in automotive revenue. Although these price cuts are part of Tesla’s broader strategy to boost sales volumes, they’ve clearly come at the cost of pressure on the company’s revenue and profit margins.

While Tesla didn’t offer specific guidance for fiscal 2025, the company made a bold statement in its Q4 shareholder deck, declaring that “2025 will be a seminal year in Tesla’s history.” Tesla also emphasized the continued advancements in its Full Self-Driving (FSD) technology, with an ambitious goal of surpassing human-level safety in the near future.

This progress is paving the way for the launch of an unsupervised FSD option, and the highly anticipated robotaxi service is set to roll out later this year in select U.S. regions. Additionally, Tesla is accelerating its FSD (Supervised) expansion, aiming to bring its cutting-edge technology to new markets in Europe and China by 2025.

Overall, Wall Street appears cautious about TSLA stock, maintaining a consensus rating of “Hold.” Of the 38 analysts offering recommendations, 12 advise a “Strong Buy,” two suggest a “Moderate Buy,” 14 give a “Hold,” and the remaining 10 maintain a “Strong Sell.” The average analyst price target of $338 is below its current price, while the Street-high target of $550 signals that the stock can rally as much as 60% from current levels.

The Case for BYD Company Stock

Shenzhen-based BYD Company (BYDDY) has been around longer than most think. With more than three decades of growth and over 30 industrial parks around the world, the company has not only established itself as a leader in the EV space, but also made significant strides across industries like new energy and rail transit. From energy generation and storage to their real-world applications, BYD is dedicated to providing innovative, zero-emission energy solutions.

While the stock saw a modest boost following its latest self-driving announcement earlier this week, investors' optimism for BYD is mostly fueled by its steady expansion, not just in its home market of China, but across the globe. This strategic growth, coupled with its groundbreaking advancements in autonomous technology, positions BYD as a rising force in the global market.

Presently valued at a market cap of approximately $135.1 billion, this Chinese tech giant has seen its stock soar by an impressive 90.1% over the past year, far surpassing the broader U.S. market’s performance during the same stretch. In 2025 alone, the stock has delivered a remarkable 30% return.

The company’s Q3 earnings report, released last October, paints a picture of strong performance. BYD reported a substantial operating revenue of 201.1 billion yuan ($27.5 billion), reflecting a 24% year-over-year increase. Meanwhile, its EPS of 4 yuan climbed 11.7% annually, underscoring the company's ongoing financial strength and growth trajectory.

Earlier this month, BYD also shared its impressive January 2025 production and sales volume figures. The company ramped up its production to a total of 327,864 units, showcasing a remarkable 59.5% increase from the 205,588 units produced in January 2024. Additionally, BYD sold over 300,500 new energy vehicles (NEVs) in the first month of the year, reflecting a solid 49.2% year-over-year growth.

While the figures are impressive, they fall short of the record-breaking sales numbers seen in the final months of 2024, where the company sold over 500,000 vehicles in September, November, and December. Nonetheless, this continued upward trajectory in sales highlights BYD’s strong momentum as it strengthens its position in the global NEV market.

While the coverage is somewhat limited, Wall Street seems to be all in on BYDDY stock, with six analysts unanimously giving it a "Strong Buy" rating. Meanwhile, the average analyst price target of $104 signals modest 13.6% from current price levels.

TSLA vs. BYDDY: Which Stock Is the Better Buy?

Both Tesla and BYD are leading automakers, but their strategies in the autonomous driving space and overall market positioning give rise to different risks and rewards. Apart from a lighter-than-expected Q4 earnings report, Tesla’s Q4 delivery figures also lagged behind Wall Street’s expectations. In fact, Tesla, long a dominant force in the EV market, saw its crown briefly slip when BYD surged ahead in Q4 2024, delivering a record-breaking 595,000 all-electric vehicles, outpacing Tesla's 496,000.

Despite this remarkable feat, Tesla managed to retain its title as the global EV sales champion for the full year of 2024, thanks to its consistent performance throughout the year. But the gap is closing, and the competition is fiercer than ever. Moreover, while Tesla is already struggling with its European business, BYD's expansion in autonomous driving technology with its “God’s Eye” system puts it in a strong position to challenge Tesla, particularly in China.

To that end, with BYD rapidly expanding its global footprint, posting solid financial and sales volume performances, and gaining traction in the autonomous space, the company appears primed for near-term growth. While Tesla’s long-term vision still appeals to patient investors, the shifting market dynamics suggest that BYD could be the more attractive option for those seeking immediate upside.