Chinese VE shares fell on Tuesday despite Nio (NIO) and Xpeng (XPEV) reporting a jump in November sales and Goldman Sachs raised its price targets on Nio stock and Li Auto (AT).
Goldman’s sales gains and bullish outlook come as demand for electric vehicles in China rebounds this year.
Nio said it delivered 5,291 vehicles last month, a jump of 109%. The company said it was “in the process” of accelerating the expansion of its production capacity this month to keep up with the increase in orders.
Xpeng delivered 4,224 intelligent electric vehicles in November, an increase of 342%. The company’s smart sports sedan, the P7, led the gains. The P7 competes with the Tesla Model 3 made in China.
Monthly figures from Li Auto and WORLD (BYDDF) are also expected later this week.
Meanwhile, Goldman Sachs raised its price target on Li Auto to 60 from 20.60 and Nio to 59 from 7.70. They also improved the stock from Nio to neutral, from the sale.
Goldman has predicted that electric vehicle penetration in China will reach 20% by 2025, up from 5% this year. He sees this penetration reaching 53% in 2035 and 80% in 2050.
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EV stocks are falling
Li Auto stock reversed lower to fall 3.1% in the stock market today. The Nio stock sank 10.2%. Both stocks have good marks from IBD. Nio’s composite rating is 96. Li Auto’s rating is 95. The 50-day lines for both stocks have increased this year.
Xpeng stock fell 10.9%. XPEV has a composite rating of 87. Technologies Kandi (KNDI) slipped 12.1%, continuing to fall after short seller Hindenburg Research accused the company of fabricating sales.
Among other EV actions, Tesla (TSLA) added 3%. TSLA stock will join the S&P 500 in a big step before December 21, the S&P Dow Jones Indices reported on Monday. On Monday, China gave Tesla permission to sell its Model Y SUVs in the country.
Tesla recently expanded its manufacturing capacity at its Shanghai Giga plant to start producing the Model Y. The US electric vehicle maker also sells its Model 3 cars in China.
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Goldman takes Li Auto, Nio Stock
Goldman’s EV stock analysts said they believe Li Auto is differentiating itself from the broader Chinese auto industry by envisioning and creating compelling experiences for electric vehicle consumers – and showing a willingness to take the risk of unconventional technologies and of acting in an innovative manner.
They added that the company’s Li One vehicle, launched last year, was the best-selling electric SUV in China. Analysts said they expected Li Auto to use the Li One as a platform to offer autonomous driving, among other things, which would help long-term adoption.
Goldman also said the Li One has the largest interior space of any best-selling electric vehicle in China and longer range.
For Nio, EV stock analysts said their downgrade to sell in July was based on the belief that “the stock price at the time reflected excessive optimism given the lack of substantial changes in expectations. volume / profit ”.
“Looking back,” analysts continued, “we underestimated the benefits to Nio of: (1) powertrain breakthroughs, particularly with cell-to-pack / blade large cell technologies; (2) the introduction of the Nio Battery as a Service (BaaS), which significantly expanded the addressable market for Nio; and (3) regulatory incentives that have reversed market demand for EVs from a continuing decline. ”
Nio’s battery-as-a-service program, launched in August, allows drivers to purchase a car without a battery, but subscribe to different battery packs, depending on their needs, on a monthly basis.
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