Amid a global climate of fervent electrification, China’s burgeoning electric vehicle (EV) industry is accelerating at full throttle, demonstrating resilience and adaptability amid the volatile market conditions and regulatory changes that have marked 2023.

After weathering a storm of challenges at the onset of the year, including Beijing’s phase-out of national subsidies and disruptions to the auto supply chain, China’s auto market is currently riding a wave of recovery, with June EV sales surprising to the upside, buoyed by low prices and rising demand.

Despite the turbulence, China’s EV producers managed to rev up their engines, with the total new energy vehicle (NEV) retail sales clocking in around 670,000, according to preliminary China Passenger Car Association (CPCA) forecasts. This represents a significant 16% growth over the previous month and 26% growth over the prior year.

Booming Exports

Undoubtedly, part of the credit goes to China’s booming EV exports, which surged 91% year-on-year to reach a record 438,200 units in May, largely fueled by demand from Russia and China-made EVs’ penetration into European and Southeast Asian markets. With the West’s sanctions on Russia following the invasion of Ukraine, Chinese carmakers have found a fertile ground for their products, contributing to a significant uptick in their exports.

According to KPMG, Chinese car makers could capture a 15% market share of new car sales in Europe within the next two years, The Financial Times reported last week.

So, who are these makers?

Tesla Counterpoint

In the midst of the EV acceleration, these Chinese EV players are emerging as potent investment alternatives for investors, presenting a viable counterpoint to the traditionally dominant Tesla (US:TSLA). Even though Tesla recently reported 466,000 of total deliveries for the second quarter with 85% growth over the prior period, the stock trades at a significant premium to its peers with a PE ratio of 82x.

Li Auto (US:LI), one of the rising stars in the industry, led the charge by setting a new monthly record with deliveries of 32,575 vehicles, representing a solid 150% growth over last year. This ambitious company has a robust plan to maintain its momentum, targeting monthly sales of over 40,000 units for the third quarter, backed by cheaper variants and unveiling a new Battery Electric Vehicle (BEV), the Li MEGA, to cater to the high-end market segment.

NIO (US:NIO), another leading player, also experienced substantial growth with a 74% MoM increase in deliveries, totaling 10,707 units. NIO’s growth was propelled by a price cut and a smooth ramp-up of its new ES6 model, along with the initiation of new ES8 deliveries in late June.

Other EV producers such as XPeng (US:XPEV) and Zeekr, owned by Geely (US:GELYF) also demonstrated commendable performance, with monthly delivery increases of 15% and 22%, respectively. XPeng’s impressive performance is partly attributed to the positive reception of its new G6 model, priced competitively at 210k RMB, while Zeekr’s growth is fueled by special promotions and financing offers on all models.

Powerful Advantages

The Chinese EV market, powered by advantageous pricing strategies, extensive local support, and surging demand, holds immense promise for those seeking lucrative investment opportunities in the vibrant and rapidly evolving world of electric vehicles.

Li Auto, with its robust sales and ambitious expansion plans, has been touted as a top pick among several investment houses. The company’s potential for strong earnings for the first time in 2023 and an attractive forward PE valuation of around 17.5x, quite a compelling proposition for investors looking beyond Tesla.

With a constant stream of new models expected to hit the market, further bolstering the growth of EV startups, the momentum in China’s EV market shows no signs of slowing down. While it remains to be seen whether these companies can sustain their remarkable growth trajectories, one thing is certain: China’s EV revolution is charging forward at an unprecedented pace.

This article originally appeared on Fintel

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