In 2025, BYD's sales of pure electric vehicles soared past Tesla's by 620,000 units, clinching the global top spot in this category for the first time. Meanwhile, FinDreams Battery, a crucial factor behind BYD's cost edge, was consistently supplying battery cells to Tesla's massive energy storage factory in Shanghai. The narrative unfolding behind the scenes is far more intricate than what is visible on stage. The distinction between the former and new champions lies in the fact that while Elon Musk envisions a future 'tale' centered around full self-driving capabilities and robotics, Wang Chuanfu steers BYD towards establishing an industrial 'groundwork' that spans from batteries and electric motors to semiconductors. Their developmental paths are increasingly diverging, yet both are securing early advantages along their respective routes.

▍Path Selection: Tangible AI vs. Core Business Intensification

The fundamental disparities in strategic thinking dictate the divergence in business scope and developmental directions between Tesla and BYD. Tesla's transformation didn't commence in the fourth quarter of 2025, but the explicit 'Tangible AI' narrative in its financial reports signaled its complete departure from the traditional automaker mold. In Musk's vision, electric vehicles are no longer the ultimate destination but the primary platform for implementing AI technology. Autonomous driving, humanoid robots, and computing infrastructure constitute the 'three pillars' of future growth, with the underlying rationale being to transform vehicles into intelligent terminals for data collection, algorithm training, and service monetization. Conversely, BYD has consistently prioritized the automotive business as its core growth engine, with a strategic emphasis on 'vertical integration of the entire industry chain + global expansion.' Within its developmental framework, the automotive business encompasses a comprehensive ecosystem, ranging from upstream lithium mining and core component production to downstream vehicle manufacturing. The 'heavy-asset, full-chain' model aims to solidify its dominant position in the new energy vehicle market through technological autonomy and cost advantages.

The choice of technological routes reflects this divergence: Tesla focuses its resources on the cross-scenario implementation of AI technologies, with autonomous driving as its strategic cornerstone. The FSD system has been upgraded to version V14, refining driving decisions through a pure vision neural network. Starting from February 2026, the global one-time buyout model will be phased out, and a full transition to a $99/month subscription system will be implemented. Meanwhile, the Cybercab model, specifically designed for driverless operation, will commence mass production in April 2026, adopting the 'Unboxed' deconstructed manufacturing process with a target production cost below $30,000. Currently, 200 vehicles without safety operators have initiated testing in Austin.

In contrast, BYD's technological intensification has always revolved around its core automotive business, constructing an industrial system that encompasses the entire value chain, from upstream lithium mining and battery material R&D to midstream blade batteries and DM5.0 super hybrid systems, and then to downstream vehicle manufacturing. The blade battery has achieved widespread application and external supply due to its high safety and long lifespan. The DM5.0 technology has enabled BYD to maintain a 28.9% global share in the plug-in hybrid market, remaining at the forefront despite competition from Geely and Great Wall Motors.

The direction of business expansion further underscores the differences between the two: Tesla extends its AI capabilities across various scenarios through its humanoid robot Optimus. The planned Optimus3 model will be equipped with FSD chips and visual systems akin to those in its vehicles, featuring 45 degrees of freedom. Initially deployed for repetitive tasks in internal factories, it will later expand to external customers, having already secured an order for 20,000 units from Amazon, with a target single machine cost (unit cost) ranging from $20,000 to $25,000.

BYD's business expansion has consistently remained within automotive-related domains. While consolidating its dual-track layout of pure electric and plug-in hybrids, it has moderately ventured into the energy storage business, constructing a product matrix covering the price range from 100,000 to 500,000 yuan. From entry-level models like the Qin PLUS and Yuan PLUS to high-end brands like Dengfeng and Yangwang, BYD achieved pure electric vehicle sales of 2.2567 million units in 2025, surpassing Tesla for the first time to claim the global crown, and plug-in hybrid vehicle sales of 2.2887 million units, with a domestic market share exceeding 35%.

In terms of computing power deployment, Tesla adopts an aggressive self-developed and self-built strategy. The next-generation AI5 chip will offer 40 times the performance of the AI4 chip, with mass production planned for 2027. Simultaneously, it is advancing the construction of a 'mega-chip factory,' with deep integration between the Dojo supercomputer and xAI's Grok3 model. In contrast, BYD focuses on computing power demands related to the automotive industry, optimizing its intelligent driving system through internal collaboration to enhance product intelligence levels and avoiding resource dispersion into non-core areas.

▍Balancing Short-Term Performance Pressures and Long-Term Value

The disparities in strategic choices directly lead to significant divergence in the performance, profit models, and valuation logic of the two companies. Balancing short-term pressures with long-term value has become a common challenge for both. Tesla's 'Tangible AI' transformation is accompanied by evident short-term performance pressures. In the third quarter of 2025, its net profit contracted by nearly 40% year-on-year, with the net profit margin attributable to shareholders dropping to 4.9%. The core reason lies in the substantial investment in AI, robotics, and other businesses. Research and development expenses and capital expenditures in this quarter totaled $3.88 billion, with capital expenditures further increasing to $2.87 billion in the next quarter. Issues such as low FSD paid penetration rates and delayed mass production of Optimus have hindered the realization of its 'future narrative.'

Although BYD focuses on the mature automotive core business, it also encounters growth challenges. In the second quarter of 2025, its net profit attributable to shareholders decreased by 30% year-on-year, marking the first quarterly profit decline in over three years. In September, sales contracted by nearly 6 percentage points year-on-year. Industry price wars caused the gross profit margin from vehicle sales to drop to 18.7%, with a net profit per vehicle of only 5,000 yuan. The highly vertically integrated heavy-asset model led to a 10,000 yuan increase in the cost per vehicle quarter-on-quarter in the second quarter of 2025 when the market share declined in the short term, partially offsetting the benefits of product price increases.

The strategies to cope with short-term pressures present stark contrasts: Tesla adopts a transitional plan of 'reducing configurations and lowering prices,' launching the standard versions of the Model 3 and Model Y with reduced configurations to capture market share at lower prices, buying time for the commercialization of its AI business. This model of 'relying on the automotive business for short-term profitability and the AI ecosystem for long-term monetization' has completely decoupled its valuation logic from traditional automakers. Currently, its PE ratio of nearly 283 reflects the market's high expectations for the future potential of its AI business.

In contrast, BYD alleviates pressures through a dual-wheel drive of high-endization and globalization, accelerating its 'going global' strategy. In 2025, its overseas sales reached 1.0496 million units, surging by 145% year-on-year. Factories in Brazil and Thailand have commenced production one after another, with the Thai factory becoming a hub for serving Southeast Asia and Europe. In the first 11 months of 2025, registration volumes in European markets such as Germany and Spain have multiplied. In November, BYD topped the electric vehicle sales chart in the Spanish market. Overseas models are generally priced higher than domestic ones, forming a new profit pool. Simultaneously, BYD increases investment in core technology R&D to enhance the penetration rate of its intelligent driving system. Its strategy of 'focusing on the core and moderately expanding' has kept its valuation rational, with a PE ratio of about 20 in the Hong Kong stock market reflecting the market's value judgment on it as an 'automotive stock.'

Although the paths to realizing long-term value differ, both companies exhibit clear planning: Tesla aims to build a complete closed loop of 'chips-computing power-algorithms-scenarios.' The mass production of the AI5 chip and the landing of the TeraFab factory will resolve computing power bottlenecks. The large-scale deployment of the Cybercab will reconstruct urban transportation services, and the Optimus robot is expected to become the core engine surpassing vehicles. Musk predicts that the robotics business may contribute the majority of the company's value.

BYD continues to deepen its advantages across the entire industry chain, consolidating product competitiveness through technological iterations. The high-end brand Yangwang achieves performance breakthroughs in extreme road conditions with its 'Easy Four-Wheel Drive' technology platform. The Dengfeng brand establishes mid-to-high-end differentiation advantages through cooperation with Mercedes-Benz. Simultaneously, while not deviating from its core automotive business, BYD cultivates new growth poles such as energy storage. It plans to continuously improve profitability and market share through product structure optimization and overseas market expansion. The long-term value of both companies relies on the continuous strengthening of their core capabilities, with Tesla betting on the cross-scenario monetization potential of AI technologies and BYD adhering to the scale and efficiency dividends of the automotive industry.

Tesla, with 'Tangible AI' as its core, is betting on the scenario-based monetization of future intelligent technologies. Its risk lies in the uncertainty of technological commercialization, while its potential lies in breaking through the growth ceiling of the automotive industry. BYD, with its core automotive business as its foundation, is competing on the efficiency and scale of the entire industry chain. Its advantage lies in the stability of its business and the sustainability of its profitability, while its challenge lies in maintaining competitiveness amid the wave of intelligence. These two choices have no absolute superiority or inferiority but represent rational decisions based on corporate genes, technological accumulation, and market environments. Tesla, with its innovative courage and technological foresight, is suitable for exploring the commercialization paths of cutting-edge technologies. BYD, relying on its manufacturing heritage and industrial chain thinking, excels at building competitive barriers in mature sectors.

From an industry perspective, Tesla's transformation has opened up imaginative space for the intelligent and diversified development of the new energy vehicle industry. Its explorations in autonomous driving and robotics may reconstruct future transportation and industrial production models. BYD's deepening has driven the popularization and industrial upgrading of new energy vehicles, with its full-industry-chain model providing a sustainable development template for the industry. In the future, the competition and cooperation between these two companies will continue to shape the global new energy industry landscape: Tesla's AI technologies may feed back into its automotive business, enhancing product competitiveness. BYD's manufacturing capabilities and market channels may also provide support for its expansion into related businesses.

Layout 丨 Yang Shuo Image sources: Tesla, BYD