China electric vehicle (EV) stocks have sold off sharply this year, with most erasing billions of dollars in value amid a relentless price war. 10.
20, down 54% from its peak this year, while BYD has declined 40% from its peak this year. However, their companies are facing major challenges, as evidenced by the ongoing sell-off in their stock prices.
One of them is the fact that automotive sales are slowing and are on track to have their worst performance since 2014. 5 million this year, much lower than last year.
Read Also: NIO Stock Under Fire: Slowing October Deliveries Pile On the Pressure One reason for this is that China, like in the United States, has started phasing out some of the incentives that customers had to buy electric vehicles. For example, the full purchase tax exemption became a 50% reduction, with the maximum benefit per vehicle falling from RMB 30,000 to RMB 15,000.
This development happened at a time when many Chinese EV companies were boosting their vehicle production. As a result, with demand falling and supply rising, companies have had to slash their prices to gain market share.
Most Chinese EV companies have reported lower gross and net profit margins in the past earnings reports. Chinese EV Companies are Betting on International Growth With its domestic market highly competitive, Chinese EV companies are now focusing on the international market, where they are getting higher margins.
5% market share in September. In the US, the Joe Biden administration placed a 100% tariff on Chinese EVs, explaining why they are not competing there.
Still, some analysts predict that Chinese AI companies have now become bargains. For example, Goldman Sachs (NYSE:GS) sees XPeng stock rising to $16 from the current $9.
Jefferies sees the stock hitting $25. 10, while Bernstein expects it to hit $5.
