China’s EV frenzy drives carmaker stocks’ outperformance of Hang Seng Index as red-hot sales show no signs of cooling
- Analysts forecast of doubling revenues comes on the back of a 37 per cent increase in total sales of pure electric and plug-in hybrid vehicles in the first half from a year ago
- Consumers who had postponed car purchases in anticipation of further discounts began returning in mid-May, sensing an end to the bruising price war
Chinese consumers’ mania for electric vehicles has driven the stocks of leading carmakers in a two month rally that has seen some of them double in value, dwarfing the market benchmark’s 7.2 per cent gain.
Xpeng has led the rally with a 141 per cent surge in its Hong Kong-listed shares in the past two months. Nio has jumped 109 per cent and Li Auto has advanced 58 per cent during that period. The performance of the trio has outpaced the 33 per cent gain in Orient Overseas International, the best performer on the city’s stock benchmark in the period.
And this frenzy is unlikely to end soon as booming sales are forecast to continue for the rest of the year. UBS predicts that EV sales in the world’s second-largest economy will probably double from the January-to-June period to 5.7 million units in the remaining six months of the year.
The stocks’ rally underscores investor optimism that China’s EV makers will weather the fierce price war and sales growth will continue. UBS’s forecast of doubling revenues comes on the back of a 37 per cent increase in total sales of pure electric and plug-in hybrid vehicles in the first half from a year ago.
“With falling lithium prices and other material costs easing too, EV prices are now at par with those of oil-powered cars, and that has opened the door for the penetration to increase in the long run,” said Huang Ling, an analyst at Huachuang Securities. “Industry sentiment will remain resilient and growth rate will stay at a middle to high level in 2023.”
The trio registered record sales in July, an off-season month because of the hot weather. Nio’s EV deliveries jumped 104 per cent from a year ago to 20,462 units and Li Auto’s surged 228 per cent to over 30,000. While Xpeng’s deliveries were largely flat on a year-on-year basis, it still recorded a month-on-month increase of 28 per cent.
