Chinese EV Makers Are Taking Over

Chinese electric vehicle (EV) makers are rapidly gaining market share globally, especially in markets without import tariffs. The U.S. effectively blocks Chinese EVs to protect domestic jobs, as American automakers can’t compete on price.

China has around 150 automakers, heavily subsidized by the government, which is unsustainable. A wave of consolidation or bankruptcies is expected. In 2024, China sold over 25 million vehicles, with Chinese brands accounting for 18 million (65% of the market), mostly thanks to EV growth.

Foreign automakers like GM are struggling in China, evidenced by GM’s recent $5 billion write-down.

Featured Chinese Auto Stocks:

1. BYD (BYDDF)
   • World’s largest EV maker, beating Tesla in revenue ($107B vs. $98B).
   • Stock doubled in the past year.
   • Trading at a forward P/E of 23 and PEG under 1.
   • Expanding globally with factories in Thailand, Hungary, Indonesia, Brazil, and upcoming ones in Turkey and Mexico.
2. Xiaomi (XIACY)
   • Known for electronics, now also in EVs.
   • Stock is up 300% over the past year.
   • Forward P/E of 40 and PEG of 1.5.
   • Highly automated car production; potential for global expansion.
   • Currently makes the SU7 and high-performance SU7 Ultra.
3. Li Auto (LI)
   • Makes “extended range electric vehicles” (EREVs).
   • Fully automated production, with 800v electric drives.
   • Hit 1 million cars produced.
   • Traded on Nasdaq, currently down for the year.
   • Strong fundamentals: P/E of 16, PEG of 0.8, and trades at 1.4x revenue.

Bottom line: Chinese EV makers are dominating the global market. For investors, BYD, Xiaomi, and Li Auto offer solid opportunities, with different growth profiles and valuations.

See full article at The Outsider Club

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