Tesla is not the only electric car maker (EV) that has seen an explosive rally of its forefront so far this year.
Shares in Tesla’s Chinese competitors have surpassed the global auto index, as investor sentiment for EV shares has been steadily rising over the past year, and some of the makers of the electric car cars in China announced major financial milestones.
Despite the pandemic, the increase in EVs sales in China, the largest car market in the world, was greater than the rise in the general car market last month, although EVs are still a small part of the total car sales in China.
Tesla and the race to become ‘the next Tesla’ thanks to a rally in the shares of Chinese EV manufacturers, which in turn has led to increased fundraising this year, including on the US stock market, Joanne Chiu of The Wall Street Journal writes.
So far, these Chinese EV files have improved the overall market and the global index for auto production stocks. The S&P index that tracks Chinese automotive and auto parts manufacturers has gained 30 percent this year. By comparison, the global automotive and auto parts index has risen 8.5 percent by 2020, according to WSJ estimates from S&P Capital IQ data.
The rally in Chinese stocks comes as Tesla has seen an explosive gain in its share price over the past year. As of the close on Thursday, shares in Tesla have increased by 287 percent this year so far, and by 652 percent since August last year.
In the global EV market, including in China, Tesla is ahead of competitors and the one to beat. Some analysts believe that some Chinese EV makers, who are struggling to compete with Tesla in the global car markets, may be the ‘Tesla of China’.
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Nine, for example, could be the ‘Tesla of China’, Alexander Potter of Piper Sandler wrote this week in a note, as carried out by Business Insider.
“With a strengthened balance sheet and a well-established market, we think NIO has a shot at earning the moniker ‘Tesla of China,'” said Piper Sandler.
Ari Wald, head of technical analysis at Oppenheimer, told CNBC earlier this month about Nio that “The stock has consolidated since its peak in July and I think this consolidation, allowing conditions with overpowering to carry forward.”
Nine American Depositary Receipts (ADRs) traded in New York increased by 232 percent year-on-year and by 374 percent year-over-year.
Earlier this week, Nio reported an increase in car deliveries for the second quarter, at 10,331, nearly displacing the cars it had delivered in the second quarter of 2019. Nine headed for even higher deliveries in the third quarter, signaling that the company believes demand will rise as its EVs continue to rise.
“We believe that penetration of NEV demand in China could accelerate from this, more than doubling from 5% in 2019 to 14% by 2025,” JP Morgan analyst Nick Lai wrote in a note issued by MarketWatch, commenting on Nio’s performance.
After Nine ADRs were announced in the United States in 2018, Li Auto last month became the second Chinese EV maker to raise money in an initial public offering (IPO) in the US. Li Auto, founded five years ago, raised US $ 1.1 billion by offering 95 million US shareholders, as ADSs.
Li Auto plans to launch a 20-size electric electric SUV, and then expand its product lineup by developing new cars, including mid-size and compact SUV models, the company said in an SEC filing.
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Since their debut on the US market at the end of July, Li Auto’s shares have increased by more than 30 percent.
This week, Chinese electric car start-up filed Xpeng Motors for an IPO on the New York Stock Exchange.
Another Chinese EV manufacturer, Kandi Technologies, said at the end of July that it was formally launching “the most affordable electric cars (EVs) on the US market,” with the compact K27 model priced at US $ 12,999 after federal tax credit and a car “the size of a small SUV”, K23, at US $ 22,499 to federal tax credit.
Kandi’s shares on the NASDAQ have risen more than 100 percent in one month. The announcement of the offering on the US market has boosted Kandi’s share rally.
As Chinese EV makers race to compete with Tesla, both in China and outside China, some investors and analysts have realized that the EV revolution is taking off. Despite someone being able to beat Tesla in sales numbers as well as market awareness, the stock market seems to be raving about EV shares.
By Tsvetana Paraskova for Oilprice.com
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