Why Chinese EV Makers Are Poised to Become Industry Giants
The car market in China is still in its early stages of growth. The number of cars on the road will need to double in order to reach just HALF the penetration of the U.S. market.
That's another 300m car owners that will be added to the existing number - much of which will be satisfied with low-cost EVs and hybrids coming from $BYD Co., Ltd.(BYDDF)$ $BYD COMPANY(01211)$ $NIO Inc.(NIO)$ $NIO-SW(09866)$ $XPeng Inc.(XPEV)$ $XPENG-W(09868)$ $Li Auto(LI)$ $LI AUTO-W(02015)$ $GEELY AUTO(00175)$.
How can you possibly not expect these companies to become giants (one already is) of the industry in the coming years? How can you invest in companies that will stand to miss out on this ginormous market?
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China's NEV sales expected to reach at least 11m units this year compared with 8.1m units in 2023. That's 35% penetration in what's expected to be a 31.6m a year car market - 75% bigger than the U.S. Let that sink in.
Unless you believe $Tesla Motors(TSLA)$ is capable of coming out with a sub $20k EV that can compete in terms of quality and driving distance with BYDDF and that trade barriers will always protect Tesla’s Western markets, be more demanding in terms of valuation (ie don’t pay crazy premiums). BYD trades at just 1/3rd the PE of Tesla.
https://x.com/BrianTycangco/status/1811767120461762567
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