For me, there’s a lot of opportunities in Chinese electric vehicle (EV) stocks. NIO (NYSE:NIO), XPeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) are three emerging car manufacturers I’m looking at closely before the market surges again.
While they all differ, there’s a common theme. They’re cheap compared to their US counterparts by the price-to-sales (P/S) ratio.
| Stock | Price-to-sales ratio |
| NIO | 5.4 |
| Li Auto | 6.5 |
| XPeng | 5.5 |
| Tesla | 12 |
| Rivian | 88 |
| Lucid | 288 |
So let’s have a close look at these three companies and see which one is right for my portfolio.
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NIO
Ok, I already own NIO stock. In fact, I bought when the share price dipped to $13. But it’s now trading at over $20 a share, still down 55% over 12 months.
Despite the recent gains, I still see $20 as a good buy opportunity. NIO has been on an impressive growth curve, comparable to Tesla, and it owns market-leading technology.
Its battery-swapping technology is a real winner for me, allowing drivers to change empty batteries for full at NIO charging stations in just a matter of minutes.
The company also uses larger batteries than Tesla, giving some models a greater range than their American counterpart.
NIO hopes to turn a profit for the first time in 2024 and will open its second factory later this year.
Collective concerns here include the impact of more Chinese lockdowns, the health of the Chinese economy, and access of these EV manufacturers to lucrative Western markets.
Li Auto
Li Auto stocks soared in May and June as Covid-19 restricted were dialled back and the company announced the long-awaited launch of its L9 model — a six-seater, full-size flagship SUV.
The firm contends that Li’s L9 is the best family SUV on the market for less than $750,000. That’s a bold statement, but even bolder when you consider the L9 only costs $70,000.
Lockdowns saw the share price fall and would have represented a great buying opportunity. April deliveries fell to less than 5,000 amid Covid-19 restrictions.
But production has recovered and Li is also on an impressive growth curve. Revenue for the quarter ending 31 March was $1.5bn, an impressive 307.89% increase year-on-year.
Despite the positivity around Li Auto, it’s a little more expensive than its Chinese peers. Both NIO and XPeng have more models too. I wouldn’t buy Li now.
XPeng
XPeng offers a cheaper range of vehicles than its peers and its delivery volume is the highest.
In June, Xpeng delivered 15,295 Smart EV, representing a 133% increase year-on-year. The company reported 34,422 EV deliveries during Q2, meaning it topped the list of related Chinese brands for the fourth consecutive quarter.
I actually think its cheaper range makes it a potential winner amid the predicted global economic downturn. A slowdown in growth is also expected in China amid a banking and property crisis.
XPeng’s P5 is being sold in Europe for around $57,000. It’s not cheap, but its primary competitor, the Tesla Model 3, costs $62,560 on the continent. Naturally, it’s a lot cheaper in China, which should aid Chinese consumer sales.
XPeng has been on an impressive growth curve, has a wide range of models at cheaper price tags. Because of this, and it’s attractive valuation, XPeng stock is a buy for my portfolio.
