China’s electric vehicle (EV) revolution is still going strong. Reuters has described the country as “ground zero” for the price war started by Tesla’s (NASDAQ:TSLA) recent cost reductions. But while the market may be shifting in favor of some models over others, China’s electric sales are still heating up.
Reports indicate that China’s EV sales are expected to grow by an additional 31% in 2023 after more than doubling in 2021 and 2022. Recent statistics support these projections. According to InsideEVs, EV sales are on the rise. Specifically, 563,334 electric vehicles were registered in China in March 2023, representing a 23% increase year-over-year (YOY). With that new total, “the market share of rechargeable cars improved to 34 percent, so more than one-third of the total volume.”
“EVs are projected to make up about 60% of total vehicle sales worldwide by 2030, and unit sales could reach 16.2 million by 2027. Governments worldwide are spending heavily on EV adoption, and the industry is ready for huge growth in the coming years.”
Many investors may assume that Tesla is the best stock to buy for exposure to the Chinese EV market. However, several other domestic companies are actually dominating in the region — and are likely to continue doing so.
Let’s take a look at the best Chinese EV stocks to buy as this boom continues.
Chinese EV Stocks: BYD ()
Tesla’s most formidable foe in China is BYD (OTCMKTS:BYDDY), the sleeping giant that stealthily outshined it in 2022. InvestorPlace contributor Will Ashworth describes BYD as “the best China has to offer” and that doesn’t feel like a stretch.
BYD saw its global plug-in EV sales double in April 2023. This demonstrates that the company’s reach extends far beyond China. As InsideEVs notes, BYD’s passenger plug-in EV sales reached 209,467 units, representing an 82% year-over-year (YOY) increase for battery EVs (BEVs) and a 119% YOY increase for plug-in hybrid EVs (PHEVs). It’s not hard to see that BYD is growing and has no plans to slow down.
This company will also have an even greater competitive edge when it opens its planned manufacturing facility in Vietnam. There seems to be no stopping BYD, which has been described as “the next Tesla” for a reason. BYD is expanding quickly and has the homefield advantage in China’s booming market. On top of that, BYDDY stock has demonstrated impressive 30% growth over the past six months.
Li Auto ()
This smaller EV producer had been gliding under many investors’ radars. But when Li Auto (NASDAQ:LI) reported record deliveries last month, the news turned many heads and for good reason.
For the first quarter of 2o23, Li delivered 52,584 EVs, up almost 66% YOY. Despite a dip in mid-April, LI stock has also been rising steadily since the start of the year and looks poised to keep trending upward. In fact, InvestorPlace’s Louis Navellier has called LI stock the only Chinese EV stock investors need:
“Targeting a larger potential pool of buyers, with lower starting prices, Li may have an easier time finding sufficient demand. If this pans out, Li could continue delivering strong delivery numbers throughout the year. This could increase investor confidence that the company will meet/beat earnings expectations.”
Navellier also notes that Li Auto seems ready and able to live up to expectations for the remainder of the year. If the company can do that, LI could pull ahead of competitors and earn a spot at the top of China’s EV race — even potentially rivaling giants like Tesla and BYD. Others have touted LI stock as an undervalued play on this quickly emerging market as well.
Chinese EV Stocks: Nio ()
Often ranked alongside Li, Nio (NYSE:NIO) has been struggling over the past few months. However, this doesn’t mean investors should count the EV company out.
Nio is still recovering from the significant headwinds caused by China’s Covid-19 lockdown measures last year. Now, though, it’s focused on moving ahead and keeping pace with rivals. One encouraging factor? Nio reported a 30% YOY delivery increase for April.
Nio is also betting big on its EV battery technology. In March 2023, the company launched a battery swap network that could easily help boost share prices in the coming months. As InvestorPlace contributor Chris MacDonald notes, Nio’s battery technology sets it apart from other EV producers, as it “allows drivers to quickly exchange depleted batteries for fully charged ones.” If Nio can leverage this network effectively, it can find the competitive edge it needs to keep up with the likes of Li and XPeng (NYSE:XPEV), even as competition continues to heat up.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.