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For those trying to gauge the health of the global electric vehicle sector, this year has begun with two sharply conflicting signals from the world’s two biggest EV producers. On January 1, China’s BYD announced that it had sold 4.3mn cars in 2024, nearly 20 per cent above its stated target. A day later, Elon Musk’s Tesla reported its first full-year sales decline for more than a decade.

The contrasting announcements highlight some key trends in a sector that has played a totemic role in the drive to decarbonise the world economy, and which is increasingly important in the global contest for industrial power.

In late 2020, President Xi Jinping approved a strategy under which sales of “new energy vehicles” — including plug-in hybrid as well as pure electric cars — would reach a fifth of Chinese passenger car sales by 2025. China has far exceeded that target: in the second half of last year, NEV sales overtook those of combustion-engine cars.

The single biggest reason for this is the rapid advances that Chinese carmakers have made in reducing the cost of their vehicles. BYD, which now controls over a third of the domestic electric and hybrid car market, has been perhaps the most impressive performer on this front. Its lowest-cost electric car sells for less than $10,000.

Analysts at Bernstein estimated that BYD’s cost of production for EVs was 50 per cent lower than that of European rivals, thanks to economies of scale, vertical integration (it makes its own batteries and other parts) and robust local supply chains (China is dominant in many key commodities and components for the EV sector).

Tesla is a major player in China too, and it achieved a 9 per cent increase in sales in the country last year. But that was far behind the wider growth rate of nearly 40 per cent in the Chinese electric and plug-in hybrid market.

As a disruptive early mover in the US electric car market, it’s unsurprising that Tesla has been losing share as other carmakers got on the electric bandwagon. Tesla’s US market share in electric vehicles slipped below 50 per cent for the first time in the second quarter of last year.

A further headache for Tesla is that while EV sales are still growing in the US, the pace of growth has slowed significantly in its most important market. The proportion of EVs in new US car sales shot up from 3.4 per cent in late 2021 to nearly 8 per cent in late 2023 — but then dipped below that level for the next two quarters. Affordability has been a key challenge: carmakers have struggled to close the price gap between electric and petrol-powered cars, and higher interest rates have made consumers less willing to shoulder the extra cost.

The share is higher in Europe. EVs accounted for nearly a fifth of car sales last year in the UK, and roughly an eighth of sales in the EU. But EV sales in the EU fell by 6 per cent in the first nine months of last year, hit by a weakening of government subsidies. That effect was particularly stark in Germany, where sales fell by more than a quarter in the year to October.

Once widely seen as a pointless halfway measure, hybrid cars are enjoying something of a second wind, due in part to concerns about the speed of expansion of electric charging infrastructure.

The US in particular has seen a surge in sales of non-plug-in hybrids, which have a small battery that is charged by the petrol engine and by the friction from braking. Sales of these cars reached 10.6 per cent of the US light vehicle market in the third quarter of 2024.

In China, momentum has gathered behind plug-in hybrids, which have larger batteries that enable them to operate without using their petrol engine at all on shorter journeys. Sales of these vehicles rose by 70 per cent year on year in the first half of 2024, to reach a 42 per cent share of China’s NEV market.

As the world’s biggest producer of plug-in hybrids, BYD is perfectly placed to benefit from this trend. Last year it sold 2.5mn of these vehicles — a 73 per cent annual rise, comfortably outstripping the 1.8mn pure electrics that it sold. Tesla, with its firm commitment to battery power, receives no benefit from the growth in hybrid sales.

How much the planet benefits is another question. The International Council on Clean Transportation estimated last year that lifecycle emissions (from manufacturing as well as driving) for battery-powered cars were about 66 per cent lower than for conventional cars, or 83 per cent lower if they’re powered only by renewables. Meanwhile, the net emissions benefit for plug-in hybrids was about 40 per cent, and for non-plug-ins, about a quarter.

Tesla shares took only a modest hit from the disappointing numbers and had made back those gains by the weekend, to trade over 70 per cent higher than where they started 2024. This is in large part because Tesla is not valued like a normal car company, whether because of its cult following, its aggressive investments into other areas of technology, or its chief executive’s bromance with the incoming US president.

But there are more straightforward reasons to suspect that Tesla’s downbeat recent numbers may prove a prelude to stronger results in coming quarters. The company plans to start to production of “more affordable models” in the first half of this year. Tesla will also gain a competitive advantage against its rivals if Donald Trump, as expected, axes EV tax incentives created by Joe Biden’s Inflation Reduction Act.

BYD, meanwhile, looked set to benefit from a shakeout in the Chinese EV market, as weaker players failed amid intense price competition, said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight. But the export prospects for it and other Chinese car companies look more difficult.

The EU, anxious to protect its own automotive industry, has imposed tough new tariffs on Chinese-made electric cars, arguing that the industry has received unfair state support. BYD is still hoping to crack into the European market with a new factory in Hungary (though it could face scrutiny after allegations that a subcontractor in Brazil subjected workers to “slavery”-like conditions). The US has in effect closed its market to Chinese EVs, with tariffs of 100 per cent.

Policymakers in the west hope these measures will pay off by giving their carmakers time to catch up with their Chinese rivals. In the meantime, warned automotive consultant Michael Dunne of Dunne Insights, “the pace of the transition is night and day between China and the rest of the world”.

Accelerating purchases, insider sales, and a rapidly evaporating premium

Something peculiar is afoot at MicroStrategy. 

The company has amassed over two per cent of all bitcoin in existence, funded through a combination of shares and convertible bonds. This strategy has turned a humdrum business software firm into something akin to a bitcoin ETF, albeit one trading at a frothy premium to its net asset value. The stock is up over 20 times since the pivot to bitcoin in August 2020.

Yet recent months have revealed some curious contradictions in this narrative. While bitcoin has maintained its stratospheric altitude at around $100,000 per coin, MicroStrategy’s stock has drifted lower, shedding 40 per cent since peaking intraday on November 21 at $550, which implied at the time a market cap of $124bn. Even its inclusion in the Nasdaq 100 index failed to boost the share price. Its premium to net asset value has meanwhile decreased from a high of 3.8 times to 1.9 times. This decline in the share price is happening even as the company continues to acquire more bitcoin.

More telling still is the company’s frenetic execution of its $21bn “at-the-money” equity offering, announced with much fanfare on Hallowe’en. What was billed as a three-year marathon has been run at the pace of a sprinter on amphetamines, with over two-thirds of the allocation exhausted in just two months. This is odd behaviour for a strategy ostensibly designed for disciplined, incremental buying. There has been no buying on the dip. Even as bitcoin’s price has held firm near its peak, Michael Saylor, the company’s chair, has ramped up bitcoin purchases at breakneck speed.

According to JPMorgan analysts, MicroStrategy accounted for an astonishing 28 per cent of capital inflows into the cryptocurrency market in 2024.

There is also no time to waste. Last Friday the company announced plans to raise up to $2bn in perpetual preferred stock this quarter to buy more bitcoin, although the precise timing and terms have not yet been announced. This comes just over a week after MicroStrategy said it was seeking shareholder approval to increase its share count by over 3000 per cent from 330mn to 10.33bn. 

The timing smacks of opportunism, as if the company’s leadership recognises that the current NAV premium — the financial equivalent of finding money growing on trees — might not be permanent. There’s a hint of urgency (or desperation) in the air, an extreme haste to lock in this discrepancy between MicroStrategy’s stock and the bitcoin price before it is arbitraged away.

Compounding the intrigue is the behaviour of MicroStrategy’s senior leadership. Saylor has publicly condemned diversification, urging investors to concentrate their portfolios in bitcoin with almost religious conviction. He has even suggested that people mortgage their homes to buy bitcoin! 

His lieutenants, however, appeared to have missed the sermon, cashing in huge chunks of their stock holdings for the very fiat currency their boss routinely derides. November saw a flurry of insider selling, as executives converted their shares into good old-fashioned Yankee dollars. MicroStrategy shares may be a bitcoin proxy and so ostensibly a unique store of value, but with insider sales totalling $570mn in 2024, management is not HODLing the stock.

The paradoxes don’t stop there. In following its strategy MicroStrategy appears structurally predisposed to buying bitcoin at ever-higher prices. During the crypto winter of 2022-2023, when bitcoin wallowed in the teens and twenties, the company’s purchases slowed to a crawl as its stock traded around NAV. Yet as bitcoin’s price soared, so too did MicroStrategy’s buying frenzy. The business model seems less a bet on bitcoin’s inherent value and more a wager on the fervour it inspires. 

The premium to NAV holds as long as bitcoin keeps ascending, and that premium is the glue that holds the entire strategy together. By selling stock at 2-3 times NAV, MicroStrategy is in effect buying bitcoin at a substantial discount. Without the NAV premium, the stock price falls, and much of the $7.2bn of convertible bonds outstanding risks being redeemed for cash at maturity, not converted into new shares. At that point, things get a lot stickier for MicroStrategy because its software business loses money and it generates no cash from bitcoin. (MicroStrategy trumpets a metric called “BTC yield”, which implies a return but really measures the percentage increase in bitcoin per share from its issue of stock and purchases of bitcoin. There is in fact no “yield” in the conventional sense of dividends or income streams.)

Perpetual appreciation is a demanding ask for any asset class, and the company seems to know it. Saylor’s relentless proselytising for bitcoin — an odd choice for someone accumulating the asset — suggests an acute awareness of the stakes. It’s also no surprise that he is cultivating government support, meeting with President-elect Donald Trump’s son Eric (which preceded a sharp 13 per cent rise in the stock on Friday) and advocating for a Strategic Bitcoin Reserve. It’s an ironic twist for a cryptocurrency long touted as a bulwark against government meddling. But when your playbook hinges on unrelenting enthusiasm, pragmatism trumps principle.

The question that lingers is whether MicroStrategy can maintain its premium valuation through sheer force of narrative much like the meme stocks that have defied conventional valuation metrics. The company has effectively become a publicly traded bet on bitcoin’s future, but one that still trades at a substantial mark-up to the underlying asset. This premium represents either the market’s faith in Saylor’s vision or a temporary, psychology-driven inefficiency waiting to be arbitraged away.

The whole affair feels like a high-stakes game of musical chairs, and as the tempo quickens, even the insiders seem to be hedging their bets. Whether MicroStrategy’s gambit will be remembered as a stroke of financial genius or a cautionary tale remains unresolved. For now, the music plays on, with the volume dialled up to 11, and the faithful — or the merely hopeful — keep dancing.

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The Omnia is still very much in concept mode — a phenomenon popular in the automotive world that has since spilled over into consumer electronics. That is to say that Withings’ splashiest product of CES 2025 may never be a product. Among other things, a body-scanning smart mirror would likely be cost prohibitive for consumers.

According to Withings, Omnia is “not just a product — it’s a transformative experience that reimagines digital health possibilities.” Certainly the notion of a daily full-body health scan is appealing to many potential customers. It does, however, come on the heels of a decade of failed smart mirror projects.

The “conceptual product” would offer 360-degree body scans, offering up user insight into weight, along with heart and lung health. Other metrics like sleep, activity, and nutrition would presumably come from a connected wearable.

The mirror itself would be interactive via touch, coupled with the inclusion of a voice assistant. The Omnia could also serve as a telemedicine portal to healthcare professions, who would gain access to user metrics and offer advice accordingly.

Withings says the system is “currently in development,” pending things like clinical reviews and additional AI features. It does add, however, that some of the above features will be available in some form via the Withings app at some point later in 2025.