Tesla can compete with BYD all right. They have a better brand, they are still a status symbol. They could totally build the best cars if they wanted to.

But competing with BYD would mean becoming "just a car company". And that's what Tesla can't do. Too many promises have been made, the stock's been pumped too high, and there is no way a just-a-car company can justify that market cap. Their only way is to go for the moonshot now. Maybe once the moonshot fails, stock goes down to "normal", and Tesla can compete with BYD.