Chinese electric vehicles offer “strong value-for-money and are more technologically-advanced” when compared to other international electric models, Bernstein said on Monday.
Analyst Eunice Lee said in a new research note that the firm favors BYD, Xiaomi, and Li Auto, all rated ‘Outperform,’ while assigning a ‘Market Perform’ rating to Nio and XPeng.
“China has emerged as a global leader in EVs, representing over 60% of global EV sales and achieving sales penetration exceeding 50% in China,” Lee noted before saying that “Chinese EVs are increasingly gaining traction in international markets.”
In May, BYD delivered 382,476 vehicles globally, from which over 89,000 were overseas — a new record-high in international sales for the sixth consecutive month.
The company set a global goal of 5.5 million vehicle sales for this year. It sold 1,763,369 vehicles from January 1 to May 31, reaching 32% of its 2025 target.
Bernstein expects competition in the Chinese market “to remain intense and put pressure on pricing and profitability.”
Late last month, BYD announced a temporary price cut of up to 35% across 22 models, sparking a price war in China among its competitors.
Bernstein named “the introduction of affordable models with enhanced range and charging capabilities, and the rise of PHEVs” as the main reasons for the surge of new energy vehicles over the last five years.
“We continue to hold a bullish view on the Chinese EV sector,” Eunice Lee wrote. “We forecast EV wholesale (including exports) to grow 25% and reach c.15mn units in 2025.”
The firm expects that electric vehicle (EV) sales in China will grow significantly in the near term, projecting around 13 million EVs sold in 2025.
That would push EVs to account for about 60% of all new car sales in the country, up from an estimated 46% in 2024. Looking further ahead, the firm forecasts that EVs will make up roughly 90% of new car sales in China by 2030.
“Chinese EVs offer strong value-for-money and are more technologically-advanced when compared to EV offerings from international brands,” Bernstein noted.
Despite the sector reaching a mass adoption phase, the firm sees further upside, forecasting “EV sales growth will be c.25% for 2025 and drive EV penetration to 60%.”
“Nearer term, we also expect PHEV growth to outpace the market,” the analyst added.
Without naming BYD’s recent price cut, which launched a new price war in the Chinese NEV market, the firm said it expects “competition within the domestic market to remain intense and put pressure on pricing and profitability.”
“Meanwhile, we believe overseas markets will present a strategic growth opportunity,” Lee added.
“For our EV names, we rate BYD, Xiaomi, and Li Auto Outperform, and XPeng and Nio Market-Perform,” Lee wrote. “Within our traditional Chinese OEMs coverage, we rate Geely Outperform and Great Wall, GAC, and SAIC Market-Perform.”
