BYD Company (OTC:BYDDY) might surpass Tesla Inc. (NASDAQ:TSLA) in annual electric vehicle sales in 2024 as demand grows in China but declines in the U.S. and Europe.

This marks a significant change from January when Bloomberg Intelligence expected Tesla to maintain its lead over BYD until the decade's end, Bloomberg writes.

However, BYD's rise could be short-lived as U.S. and European tariffs limit Chinese automakers' growth to Asia and emerging markets.

Weakening demand for battery EVs means that internal combustion engines, including hybrids, will sustain profits for legacy automakers like General Motors Co. (NYSE:GM), Volkswagen AG (OTC:VWAGY), and Ford Motor Co. (NYSE:F). This trend might drive more share buybacks or takeover activities.

On Tuesday, Tesla reported its fourth consecutive quarter of disappointing profits. The company is behind its 1.8 million car sales from last year and has warned of a lower growth rate in 2024.

The company reported earnings per share of 52 cents in the second quarter, down 43% year-over-year, missing the consensus estimate of 62 cents per share.

Also Read: Buffett's Berkshire Hathaway Reduces Stake In Tesla Rival BYD Below 5% To Shift Focus To US: Report

Additionally, Porsche AG (OTC:DRPRF) recently revised its goal of having battery-powered cars account for more than 80% of new vehicle sales by 2030.

BYD briefly overtook Tesla in pure EV sales in the fourth quarter of last year, selling 526,409 units compared to Tesla's 484,507.

This year, BYD continued its momentum by shipping nearly 1 million electric and hybrid cars in the second quarter, driven by aggressive discounts in China.

However, Bloomberg Intelligence warns that the price war in China is "unsustainable" and could lead to further market exits and consolidation.

Despite current challenges, BYD is forecast to hold its sales lead over Tesla through 2027. However, Tesla is expected to regain the top spot in 2028, with Volkswagen gradually closing the gap.

Tesla remains the largest automaker by market capitalization, valued at $786 billion as of Tuesday's close, before an 8% drop in extended trading. BYD is third, with a market cap of just under $100 billion.

Price Action: BYDDF shares were up by 3.66% to $31.50 premarket at the last check on Wednesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: BYD