Bocom International analyst Angus Chan released a new note on Thursday saying he expects the retail sales of new energy vehicles (NEVs) in China to grow rapidly in the upcoming years driven by strong new models from OEMs, coupled with policy and high oil prices. Chan sees the penetration rate of new energy vehicles jumping to 25.3% in 2022 and 34% in 2023.
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Chan named the pure EV makers NIO and XPeng as leaders alongside plug-in hybrid EV maker LI Auto due to their “timely launch of explosive models; strong financing capabilities, and the focus of research and development with different characteristics to create a differentiated brand positioning”. The analyst initiated coverage on XPeng and LI Auto with a Buy rating and on NIO with a Neutral rating.
The analyst added he expects the three automakers to invest “heavily in new technologies to deepen the moat in the coming years, such as smart cockpits and autonomous driving technologies”.
In the report, the analyst said the LI ONE model and also the recently launched L9 model “will drive high sales and higher gross profit margins” and that he is optimistic about XPeng‘s autonomous driving technology and also the upcoming SUV, the XPeng G9. With NIO, the analyst says he is cautious saying the company has its own models “competing at the same price” adding it “faces uncertainty with the launch of its mass-market brand”.
BOCOM International Holdings is a subsidiary of Bank of Communications Co., Ltd. and provides securities brokerage, corporate finance, and asset management to clients in China and overseas. Bank of Communications was founded in 1908 and the fifth-largest bank in mainland China.