Auto analysts pick who can survive in China’s fiercely competitive EV market | Wilnesh News
Investment analysts are debating several potential winners in China’s auto market after fierce competition was on full display at Beijing’s 10-day auto show. The opening morning of China’s biggest auto show of the year – in this case on April 25 – is usually packed with crowds. But this time, the sheer number of people and cars meant that movement between booths was often slow. I found that the second day was no better than it had been in previous years. “The number of visitors this year is simply overwhelming,” Nick Lai, head of China equity research and Asia-Pacific automotive research at J.P. Morgan, said in a report in late April, noting the live streamers and overseas dealers who attended the show. Business has increased. “This year, we have noticed that a large number of foreign visitors are overseas dealers or importers of Chinese brands,” JPMorgan analysts said. They expect overseas markets to contribute about a quarter of major automaker BYD’s profits this year. Tesla, which gets more than a fifth of its sales from China, has not attended a major auto show since protesters disrupted its booth in 2021. But recently, with Chief Executive Elon Musk making a surprise visit to Beijing over the weekend, the company overcame data security hurdles in local car sales and moved one step closer to getting its driver-assist software approved for use in China. “Although the Chinese car market is about 50% larger than Europe, there are about 170 brands in the market compared to 80 brands in Europe, which clearly shows that the market is oversaturated and has poor economies of scale, with each brand selling about 150,000 cars , compared with about 200,000 in Europe, J.P. Morgan European auto analysts said in a separate report last month. “This has led to irrational competition in the transition period from internal combustion engine vehicles to pure electric vehicles,” the report said. This raises the question whether international OEMs, including Premium, should compete in the entry-level or compact car segment. Open to the public The Beijing Auto Show has opened to the public after restricting entry to businesses and media for two days. Car companies then compete to attract customers in addition to offering coffee and prizes. Both Porsche and Geely-backed Zeekr showcased the Apple Vision Pro experience, and the device is not yet available in China. Seconds before the end, the organizers will remove the barriers, allowing the crowd to flock to performers from automotive and autonomous driving supplier Asensing, showing off their cars while learning about the latest industry trends. It will have its own sensors and chips to support global expansion, noting that “most people’s next car will be smarter.” “Auto shows have become a marketing tool for top brands to gain traction not only through products but also through sound management,” Morgan Stanley Asia-Pacific automotive analysts said in a report last week. “Electric vehicle manufacturing,” they said Businesses, especially the founders of brands such as Xiaomi and BYD, stole the spotlight.” According to sources, on the morning of April 25, Xiaomi founder Lei Jun took a walk in the convention and exhibition center after his speech to promote his company’s new SU7 electric sedan. . “Xiaomi is one of the surprising standouts, with its SU7 and its chairman Lei Jun having the most clicks on social media,” Jefferies Automotive Equity analysts said in a May 1 report. “We learned Marketing is important and this is in the DNA of (Xiaomi) as a consumer electronics giant.” The smartphone and home appliance company said it had delivered 7,058 units of the SU7 when deliveries began in April. Analysts at Bank of America Merrill Lynch said that April delivery volumes of NIO and Zhejiang Lingdao were better than expected. NIO shares have soared more than 50% since their lows in mid-April. “We believe orders will improve (month-on-month) in May due to the stimulus announced on April 26,” Bank of America analysts said in a separate report. Trade-in Policy As part of China’s effort to encourage trade-ins this year, the Commerce Department It said that by the end of this year, the purchase of certain new energy vehicles and some fuel-powered vehicles may be eligible for subsidies of about US$1,000 or more. Analysts at Jefferies estimate the policy could boost China’s passenger car sales by 1 million this year, with electric and gasoline-powered models split equally. The new forecast means the penetration rate of new energy vehicles will rise to 45% from the previous 44%, the report said. Analysts highlighted Chinese auto stocks such as Leapmotor, Geely Auto and BYD, all rated “buy” and listed in Hong Kong. As of Friday’s close, Zero Sports Car had the largest increase from Jefferies’ price target, implying a potential gain of 20%. JPMorgan’s top picks also include BYD and Zero Sports Car, which it views as potential beneficiaries of government stimulus measures. Meanwhile, analysts expect Geely and Xpeng Motors may “benefit from recent positive market sentiment.” The focus on Chinese automakers shows that foreign companies are suffering. “During an investor day in Beijing on the eve of the auto show, (VW) management expressed concern about how Volkswagen and most foreign automakers misjudged changes in consumer demand and missed the emergence of cost-competitive domestic industries in China. “After losing its market leadership, Volkswagen aims to maintain its number one position among foreign OEMs.” Jefferies also expressed concern for Volkswagen and its local electric vehicle partner Xpeng Motors. Has a buy rating but only holds ratings on Tesla and Toyota Motor. —CNBC’s Michael Bloom contributed to this report.
