Chinese EV stocks: Nio upgrade, Beijing action helps relax U.S. delisting concerns
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Chinese electric vehicle stocks gained after Beijing confirmed plans to revise confidentiality rules in regard to overseas listings. That move could help Chinese companies avoid being delisted in the U.S.
There was also some support from Wall Street, where UBS issued a positive breakdown on the Chinese electric vehicle sector on its view that the risk-reward profile is more favorable following the big pullbacks in share prices in 2022.
Notably, a consumer survey conducted by the firm revealed that 73% of Chinese consumers are likely to consider buying a battery electric vehicle as their next car vs. 68% in 2021 and ahead of the 49% response seen globally. The UBS read on future EV demand in China still strong.
"Despite increasing investor concern on the backlash to electrification from raw material price inflation, we expect China EV penetration to rise from 16% in 2021 to 25% in 2022 in passenger cars, implying 5.5mn units from 3.3mn the previous year. Key drivers include: (1) continuously improving customer acceptance and brand recognition; and (2) expediting investment by carmakers in technology, products, branding and distribution channels."
Within the sector, UBS upgraded Nio (NYSE:NIO
+6.0%) to a Buy rating from Neutral after noting the ~30% share price decline over the past three months and in anticipation of its NT2 model cycle this year. Li Auto (NASDAQ:LI
+4.1%) is still slotted by UBS as the top overall Chinese EV stock pick, while XPeng (NYSE:XPEV
+4.4%) is still rated at Hold.
UBS also took a whack at Tesla (TSLA
+1.2%) on Monday, giving the EV leader a higher price target of $1,100 after it emerged as the clear winner of the firm's electric vehicle consumer survey. Tesla's global EV leadership is not seen being threatened even by the most aggressive competitors in the near term. That despite local brands in China showing strong recent momentum.
Dig into Tesla's Q1 deliveries report.