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Tesla isn’t the only electric vehicle (EV) maker to have seen an explosive rally of its stock so far this year.
Shares of Tesla’s Chinese rivals have outperformed the Global Auto Index as investor sentiment towards EV stocks has grown increasingly positive over the past year and some Chinese electric car makers have announced they will important funding milestones.
Despite the pandemic, the increase in sales of electric vehicles in China, the world’s largest auto market, has been larger than the rise in the overall auto market last month, although electric vehicles still account for a small portion of sales. total vehicles in China.
Tesla and the race to become ‘the next Tesla’ are fueling a rally in shares of Chinese electric vehicle makers, which in turn has resulted in increased fundraising this year, including on the stock market American, Joanne Chiu of The Wall Street Journal writes.
So far this year, VE’s Chinese stocks have outperformed the overall market and the global auto manufacturing stock index. The S&P index which tracks Chinese car and auto parts manufacturers has gained 30% so far this year. For comparison, the global auto and parts maker index has risen 8.5% so far in 2020, according to WSJ estimates from S&P Capital IQ data.
The rally in Chinese stocks comes as Tesla has seen an explosive gain in its stock price over the past year. At Thursday’s close, Tesla shares have climbed 287% year-to-date and 652% since August last year.
In the global EV market, including China, Tesla is ahead of its competitors and the one to beat. Some analysts believe that some Chinese electric vehicle manufacturers, who compete to compete with Tesla in the world’s largest car market, could be the “Tesla of China.”
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Nio, for example, could be the “ Tesla of China, ” Piper Sandler’s Alexander Potter wrote in a note this week, carried by Business Insider.
“With a fortified balance sheet and a well-established brand, we believe NIO has a chance to earn the nickname ‘Tesla of China’,” said Piper Sandler.
Ari Wald, head of technical analysis at Oppenheimer, told CNBC earlier this month of Nio that “the stock has consolidated since its peak in July and I think this consolidation allows for overbought conditions. previously to go back “.
Nio’s New York-traded American Depositary Receipts (ADRs) have jumped 232% year-to-date and 374% from levels a year ago.
Earlier this week, Nio reported an increase in vehicle deliveries for the second quarter, to 10,331, nearly triple the number of vehicles delivered in the second quarter of 2019. Nio guided for even higher deliveries in the third quarter, indicating that the company believes demand for its EVs will continue to increase.
“We believe that NEV’s demand penetration in China could accelerate from here, from 5% in 2019 to 14% in 2025,” wrote Nick Lai, analyst at JP Morgan, in a published note. by MarketWatch, commenting on Nio’s performance.
After Nio listed ADRs in the United States in 2018, Li Auto last month became the second Chinese electric vehicle maker to raise funds in an initial public offering (IPO) in the United States. Auto, founded five years ago, has raised $ 1.1 billion by offering 95 million US Depositary Shares, or ADSs.
Li Auto plans to launch a full-size premium electric SUV in 2022, then expand its product line by developing new vehicles, including mid-size and compact SUV models, the company said in a filing with of the SEC.
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Since their debut in the US market in late July, Li Auto shares have risen more than 30%.
This week, Chinese electric car start-up Xpeng Motors filed for an IPO on the New York Stock Exchange.
Another Chinese EV maker, Kandi Technologies, said at the end of July that it was officially launching “the most affordable electric vehicles (EVs) in the US market”, with the compact model K27 priced at US $ 12,999 after credits from federal taxes and a vehicle “. the size of a small SUV”, K23, at US $ 22,499 after federal tax credits.
Kandi’s shares on the NASDAQ have climbed more than 100% in one month. The announcement of the offer in the US market fueled Kandi’s stock rally.
As Chinese electric vehicle makers rush to compete with Tesla, both inside and outside of China, some investors and analysts have realized that the electric vehicle revolution is gaining momentum. Whether anyone can beat Tesla in terms of sales or brand awareness, the stock market seems to have gotten into EV stocks.
By Tsvetana Paraskova for OilUSD
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