There is also hope that relations with China may be improving, at least in a small way, after the Biden administration approved the construction of a Chinese battery plant in Michigan.
Chinese EVs Rock Down to Electric Avenue
While General Motors (NYSE:GM) and Ford Motor (NYSE:F) are focusing their electric vehicle strategies on high-end pickups and SUVs, the three Chinese companies are selling smaller cars more attractive to the mid-market.
Li makes plug-in hybrids with a gas engine powering its battery. Nio has begun exporting its cars to Europe. XPeng recently announced a car priced at less than a Tesla (NASDAQ:TSLA) Model Y. Polestar hopes to build its coming Polestar 3 car at a Volvo (OTCMKTS:VLVLY) plant in South Carolina. If oil demand is indeed peaking, it means these cars will have a larger market opportunity sooner than expected.
For now, all the Chinese companies are focused on their home market. The government there has extended electric vehicle tax credits to boost demand. There’s also a price war going on, which should also boost the efforts of Chinese electrics in the mid-market.
The largest Chinese electric car company doesn’t trade in the U.S. That would be BYD (OTCMKTS:BYDDF), which won early backing from Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B). BYD is out-selling Tesla in China and gaining market share with cars costing $25,000.
Right now, the U.S. market at that price point is dominated by gas-first hybrids like the Toyota (NYSE:TM) Prius, which can’t be recharged. Toyota recently announced it will produce a solid-state battery with a 600-mile range that recharges in 10 minutes. The battery should be available in 2027.
Chinese EV Stocks: What Happens Next
There will be price competition in the U.S. electric car market within three years. Odds are growing that Chinese companies will dominate.
On the date of publication, Dana Blankenhorn 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.