Tesla is the best-performing auto stock this year, but it's also given a boost to the handful of other electric carmakers across the globe.
While Tesla shares fell 17% in Wednesday's session, Elon Musk's firm is still up around 76% year to date, thanks to a monster rally seen over the previous few days. Chinese electric vehicle (EV) firms NIO and BYD, both listed in the U.S., are up over 9% and 19% respectively so far in 2020.
Tesla is the biggest carmaker out of the these firms based on deliveries of electric vehicles. In 2019, the U.S. firm delivered approximately 367,500 cars. In comparison, BYD delivered 229,506 electric vehicles. The company still sells fuel-based models. NIO has not released its 2019 numbers yet, but it is likely to be smaller than Tesla and BYD.
"A major part of the eye popping Tesla rally is around an inflection in EV demand for China," Daniel Ives, managing director of equity research at Wedbush Securities, told CNBC on Wednesday.
"China EV demand is starting to inflect, which is worth $300 to Tesla's stock in our opinion, and a huge catalyst and tailwinds for domestic Chinese EV players like NIO and BYD."
China is one of the biggest electric car markets in the world. In the past few years, the industry has been supported by government subsidies which has helped boost sales. But that support has slowly been reduced and in 2019 electric vehicle sales fell 4% year-on-year, according to data from the China Association of Automobile Manufacturers.
"Understandably, at current levels, investors are comparing Tesla's valuation to tech stocks rather than auto stocks ... Tesla's market cap is rapidly approaching that of Toyota and is more than 5x the market cap of Ford," Morgan Stanley analysts said in a note on Wednesday.
Traditional automakers haven't fared as well during the same period. Ford is down more than 10% year-to-date following a recent big plunge in shares after disappointing earnings. General Motors is around 4% lower this year.
Europe's Daimler and BMW are down approximately 11% and 9.5% year-to-date, respectively. Volkswagen's Frankfurt-listed shares are around 1% lower for the year so far.
Meanwhile, Nissan is down around 7% this year and Honda is about 8% lower, as of Wednesday's close in Tokyo. All of these firms are making a big push into electric vehicles.