3 Chinese EV stocks give Tesla a run for its money
The sooner we join the transition to electric vehicles (EV), the better it is for the environment. Like it or not, countries are taking significant steps to ensure the effective adoption and penetration of electric vehicles. In addition to government policies and subsidies, heightened consumer interest continues to fuel valuations for major electric vehicle stocks. The International Energy Agency predicts that the number of electric vehicles will reach 145 million by 2030.
As governments around the world attempt to meet their energy and climate goals, we will see a continued increase in demand for this sector. So over the next few decades, there could be more electric vehicles on the road than gas-powered cars.
With that in mind, it makes sense to invest in promising EV stocks that could give the EV maker strong competition. You’re here (NASDAQ:TSLA). As Tesla continues to dominate the electric vehicle market, TSLA stock is very expensive and could face a downside as massive competition from new players emerges.
Let’s take a look at the three Chinese electric vehicle stocks that are set to take on Tesla.
BYD Co. (BYDDF)
At the top of my list is the Chinese electric vehicle manufacturer BYD Co. (OTCMKTS: BYDDF). This company is backed by Warren Buffett and is already the largest electric vehicle company in the world.
BYD has already provided strong competition to Tesla, with its electric vehicle sales reaching 911,141 last year. Its hybrid sales amounted to 946,238 in 2022, a growth of 247%. BYD stock is trading around $25 per share, down 15% over the past month. It is therefore a stock that is trading at a discount, with excellent upside potential for investors looking to buy at this attractive entry point.
A price war between Tesla and BYD has driven the stock down lately. Consumers expect more aggressive reductions, which has sidelined potential buyers waiting to see how prices will come down.
BYD sells more cars than Tesla, largely due to its price advantage and impressive manufacturing capabilities. The company has grown aggressively, with BYD recently beginning to sell its electric vehicles in Japan. It also exports electric vehicles to Thailand and India.
Basically, the business is stable and has huge potential for growth. Its February delivery numbers were up 119% year-over-year, which is no small feat. If you believe in the possibility of electric vehicles and are in it for the long haul, BYD stocks are the ones to own and hold forever.
Next on this list of EV stocks to buy is Nio (NYSE: NIO). Although there is mixed sentiment about NIO stock, it has strong long-term potential. Already a leader in the Chinese EV market, NIO is a pure player in the EV sector.
That said, NIO stock has been hit hard since 2022 due to supply chain issues, with its price dropping around 60% in the past six months. It is trading around $8 at the time of writing, an attractive entry point for investors. Anything below $10 should be a good entry point, in my opinion, for this EV drive.
The only reason to bet on Nio is that it is not an early-stage EV maker. The company is already present in the global market, delivering 20,663 cars in 2023 alone. Additionally, the company is on track to meet its quarterly delivery figures.
In the company’s most recent quarterly results, Nio reported a loss of 44 cents per share, and management’s guidance also fell short of expectations. It hit the title hard, but the second half of the year could be better. The poor results of a quarter should not scare investors. These losses are expected to decrease in the coming years.
Nio will launch new models this year and continue to develop its consumer product, which could generate impressive revenue. If you’re looking for long-term EV stock, NIO stock is a no-brainer.
Another Chinese EV maker that has suffered more than probably deserved is XPeng (NYSE:XPEV). As the company continues to grow, its focus on selling sport utility vehicles (SUVs), sedans and family sedans sets it apart from the competition.
XPEV stock is trading today at just under $9 per share, down about 40% over the past six months. The stock suffered as much as NIO, but the company could benefit from the recovery of the Chinese economy. Don’t expect the stock to show immediate improvement. However, over time, I expect XPEV stock to trend towards its former high of around $35 per share. He can certainly double in the second half.
XPeng recorded a 15% growth in deliveries in February, with 6,010 vehicles delivered. The company is aiming to produce 200,000 cars this year, and while that may seem like a very lofty goal, even if it gets closer to that number, the company will generate solid revenue this year. Negative market sentiment is not stopping the company, and it recently launched the new P7i sports sedan for the Chinese market, introducing further improvements and higher charging efficiency.
As of the date of publication, Vandita Jadeja had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.