With more than 300,000 EVs sold in the last quarter in the United States alone, EV stocks are worth considering. The global EV market has plenty of demand for eco-friendly vehicles, including non-US players.
EVs are projected to account for 50% of global car sales and 85% of U.S. car sales by 2025, creating growth opportunities in a competitive market. For those looking at how this sector is likely to shape up, I think Chinese EV stocks are worth watching closely right now.
Many of the companies on this list have been hit hard for a variety of factors. Both geopolitical concerns and ownership structure impact the risk factors of Chinese ADRs.
That said, here’s why I think these three EV companies are worth considering near their most recent bottoms.
Nio (NIO)
Nio (NYSE:NIO) recorded significant sales growth this past quarter, delivering nearly 400,000 vehicles and expanding into Europe.
The company is also venturing into chip manufacturing for autonomous vehicles, enhancing its position in the AI industry, a big plus for hyper-growth investors considering this name.
Despite economic pressures in China and cash flow concerns, Nio experienced a significant stock price drop. In September, Nio’s EV deliveries grew by 43.8% year-over-year, indicating strong performance.
Nio also has more control over its production process. Anhui Jianghuai Automobile Group’s plans to sell factory assets, including those used for Nio’s vehicles, could facilitate this.
Nio’s vigorous growth in deliveries, battery-swapping stations, and favorable valuation suggest substantial potential, though not without risks. The company’s unique position could offer impressive returns if it maintains its technology leadership.
Li Auto (LI)
Beijing-based Li Auto (NASDAQ:LI) prepares to launch its Li Mega electric vehicle, aiming to make it China’s top-selling car over 500,000 yuan.
In October, they achieved a milestone with 40,422 deliveries, a 302% year-over-year growth. LI stock is up 65% in 2023.
Li Auto should report Q3 results with impressive year-over-year delivery growth of 296.3% reaching 105,108. The company has strong growth potential because of the upcoming LI MEGA launch and aggressive retail expansion. The company holds $10.17 billion in cash and equivalents, supporting product innovation and retail expansion, making it one of the best EV stocks to have on your watchlist.
The Li Auto L-series, including the Li L9 and Li L8 SUVs, achieved over 100,000 units in cumulative deliveries. The launch of the Li MEGA in the pure electric vehicle segment has garnered significant interest.
As of Oct. 31, Li Auto boasts 372 retail centers in 133 cities and 315 service and authorized body and paint centers in 210 cities, solidifying its presence in China. That said, Li Auto is poised for significant growth in China’s EV market.
XPeng (XPEV)
In Q2 2023, XPeng (NYSE:XPEV) delivered 23,205 vehicles, a 27.3% increase from the previous quarter. It maintains 411 stores and 1,024 charging stations, emphasizing infrastructure investment.
XPeng received an “AAA” ESG rating from MSCI for its strong environmental, social, and governance practices.
In September 2023, the company achieved notable growth, delivering 15,310 Smart EVs, up 12% from the previous month and an impressive 81% year-over-year increase. The G6 model contributed to a 72% rise in Smart EV deliveries in Q3 compared to the previous quarter.
Additionally, Xpeng presents an attractive investment opportunity with strong fundamentals and positive technical indicators. It maintains a favorable price-to-earnings ratio, suggesting an undervalued stock. A high return on equity and low debt-to-equity ratio demonstrate strong financial strength. The stock’s upward trend, supported by moving average convergence divergence, suggests a bullish momentum.
On the date of publication, Chris MacDonald did not have (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.
