Buying a new car can be a big hassle.
I remember buying my first car, a Honda Accord, back in 2020, and the decision involved all the nitpicky things, like choosing a color, comparing features, and figuring out whether the monthly payment fit my budget. These days, though, that last question can end the conversation before it begins.
The average new vehicle costs more than $50,000, according to Kelley Blue Book. And while electric cars promise lower running costs, their sticker prices still make shoppers hesitate.
That’s why, amidst a sea of Michael Burry headlines, his latest investment caught my attention.
The ‘Big Short’ investor famous for anticipating the 2008 housing crash has scooped up shares in a Tesla (TSLA) rival whose appeal, in his view, is that it’s able to build cars for less.
Tesla, meanwhile, is asking investors to believe in much more than the cars it sells. Its enormous stock-market valuation reflects hopes for autonomous driving, robotics, and businesses that remain works in progress.
Both ideas could prove right. A manufacturer can be efficient without winning every customer, and Tesla may eventually deliver on its ambitions.
But as Americans weigh what they can afford, Burry’s move begs the question: Is Tesla’s future worth the premium investors are paying today?
Michael Burry buys Tesla rival as a massive valuation gap draws attention
Michael Burry added shares of Chinese automaker BYD in an October 6 portfolio reshuffle, according to a Substack update cited by Seeking Alpha on October 12.
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That said, how many shares he bought and how much he paid remain undisclosed.
“BYD is potentially the lowest-cost producer of vehicles in the world thanks to its vertically integrated model at scale,” he wrote in earlier analysis.
He pointed to the company’s in-house batteries, manufacturing expertise, and overseas expansion.
Now consider the valuation gap.
At the October 9 close, Tesla was worth around $1.51 trillion, according to Stock Analysis, while BYD stood near $104 billion. Yet BYD reported about $111 billion in revenue for 2025, according to the 311 Institute, compared with Tesla’s $94.8 billion, according to the companies’ annual disclosures.
That’s a massive 14.5-to-one gap in market value.
That doesn’t mean Tesla is necessarily overpriced, though. BYD sells plug-in hybrids as well as battery-powered vehicles, while Tesla’s valuation reflects its ‘other bets’, which include robotaxis, energy storage, and robotics beyond car sales.
Given the impact of its other businesses, many of which are speculative, Tesla stock is trading at over 218 times non-GAAP forward earnings according to Seeking Alpha.
Burry’s skepticism of Elon Musk’s automaker isn’t new, though. His firm held bearish Tesla options in 2021, and Musk later dismissed him as a “broken clock.”
In June 2026, Burry disclosed another Tesla short at $416.22 a share, but there’s no confirmation he still holds it as reported by Electrek.
However, for me, what’s most revealing is what Burry chose to buy, which is a manufacturer he believes can build cars at a lower cost.
Tesla faces an affordability challenge as Americans rethink car purchases
Americans paid an average of $50,089 for a new vehicle in August, according to Kelley Blue Book. Moreover, financing one is far from being painless.
Experian says the average new-car loan payment reached $765 a month in the second quarter. That’s roughly 39% higher compared to Q2 2019, when the payment was around $550.
Tesla isn’t immune to that squeeze.
Its average U.S. transaction price was $52,616 in August, above the overall market but below the $54,813 average for electric vehicles, Kelley Blue Book found.
So even though Tesla might not be unusually pricey compared with its EV competitors, electric cars remain a costly purchase for many households.
The tension shows up in online discussions.
After test-driving a 2026 Model Y, one Reddit user loved the experience but admitted,
“As much as I’d love the 2026 one, I drove with how quiet it was on the road, and the interior, new design, and the awesome-looking steering wheel, I’m not sure I can afford it.”
That’s exactly what has piqued Burry’s interest in BYD.
The Chinese manufacturer produces its own Blade batteries and integrates major powertrain components, giving it greater control over production costs.
Its lineup also includes smaller vehicles Tesla doesn’t sell, including the Dolphin Surf, listed in France from €19,990 for the base model.
There’s a catch for American shoppers: BYD passenger cars aren’t broadly available in the United States, where tariffs and trade barriers limit Chinese vehicle competition.
BYD Executive Vice President Stella Li recently acknowledged that the company has been considering entering the U.S. market for a “long time.”
“We don’t have clarity, visibility and stability there,” she added, “so we’re saying let’s hold and not to go to the US for passenger cars at this moment.”
Still, Burry’s bet raises a bigger question: Which automakers can deliver vehicles households can actually afford?
Tesla’s next earnings report could test Wall Street’s lofty expectations
Tesla’s pricing setup rests on more than the vehicles leaving its factories.
Investors are betting that robotaxis, self-driving software, humanoid robots, and energy storage will become major profit engines, but as I remarked earlier, a lot of these businesses remain too speculative to materially change the operational framework.
For now, the car business still matters.
Tesla delivered 486,532 vehicles in Q3, beating analysts’ expectations despite a 2.1% decline from a year earlier, as reported by Electrek. Its Supercharger network, software, and customer loyalty give it advantages a lower sticker price cannot erase.
Interestingly, Burry’s preferred automaker faces problems.
BYD’s 2025 net profit fell 19%, according to Reuters, as competition squeezed margins. Demand in China remains relatively weak, while trade restrictions complicate overseas expansion.
That makes Tesla’s October 21 earnings report especially important.
I’ll be watching Tesla’s automotive profit margins and free cash flow, as well as capital spending and evidence of progress in autonomy, robotics, and energy. Those figures should help show whether Tesla’s existing automotive business can support the future investors are paying for.
Burry’s purchase doesn’t prove Tesla is overvalued. It exposes the tension: Americans need cars they can afford, while Tesla shareholders are paying for ambitions that extend well beyond selling them.
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