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With Apple pulling out of the electric car market and Tesla reportedly losing market share in some Chinese cities, all of the best EV stock moves right now are based in China. no doubt. The country is the world’s largest car market, with new energy vehicle penetration of at least 30%. Most of those cars are of domestic brands. Morgan Stanley analysts said in a Feb. 28 report examining the distribution of sales for the previous month that despite the “price cuts” announced that month, Tesla China’s He said it had lost market share in cities. Xiaopeng and Nio lost market share across the region, while BYD gained market share in major cities but lost market share in developing regions due to increased competition from state-owned enterprises, the report said. Li Auto’s market share has been declining, and Morgan Stanley analysts are watching to see if new models will give it a boost. The company on Friday unveiled its first fully battery-powered vehicle, a utility vehicle called the Li Mega. All of Li Auto’s previous cars have been SUVs, which are technically hybrids, as they come with a fuel tank to charge the battery. Its product strategy addressed consumers’ range concerns and quickly propelled Li Auto to tens of thousands of vehicle deliveries per month, making it a best-seller among peer startups. Earnings top expectations The U.S. and Hong Kong-listed company last week reported earnings that beat FactSet estimates, prompting several analysts to raise their price targets. “Following our upgrade earlier this month, Li Auto provided impressive returns and guidance, further solidifying its position as China’s top OEM,” Deutsche Bank analysts said in a late February note. Stated. They rate the stock a “buy” and raised their price target by $9 to $50 per share. This is about 9% above Thursday’s closing price of $45.88. Part of their theory stems from the automaker’s high gross profit margins, which came in at 23.5% in the fourth quarter, above expectations of 21%. Li Auto’s management said it expects gross profit margins to vary between 10% and 25%, but generally stay above 20%. “Despite continued price competition, gross margins have proven to be much more resilient than feared,” Deutsche Bank analysts said. Li Auto’s stock price has risen more than 20% since the beginning of the year. Deliveries in February were relatively low at 20,251 vehicles, but the company attributed this to the week-long Lunar New Year holiday that month and the planned launch of new models. However, the company still expects deliveries to recover to 50,000 units in March. Analysts at Bank of America Securities last week raised their forecasts for Li Auto’s sales volume and earnings per share, and raised their price target by $9 to $57 per share. BofA rates the stock a “buy.” Li Auto also plans to bring his three other battery-only vehicles to market, starting deliveries of the new Li Mega this month. New competition? But even with premium pricing, the company is not immune to intense competition in China’s electric vehicle market. Aito, a new energy vehicle brand developed by Huawei, claims to have delivered 21,142 vehicles in February, more than Li Auto, and says it has received orders for more than 50,000 units of its new M9 SUV. Stated. The brand sells cars at a slightly lower price point than Li Auto and does not yet offer an MPV. Aito automaker Ceres said on Friday it produced more than 32,000 cars in February, an increase of about 250% from a year earlier. Shanghai-listed Ceres shares have risen 21% since the beginning of the year. Chinese smartphone company Xiaomi is also targeting 20 million premium users with its next car, company president Weibing Lu told me last month. Top government officials are also paying attention. Chinese President Xi Jinping on Thursday called for more support for new energy vehicle development, especially by building charging infrastructure. Separately, the White House announced Thursday that the United States is launching an investigation into whether imports of Chinese-made cars may pose a national security risk. The U.S. remains a difficult market for Chinese automakers to tap, but their electric vehicles are sold in Europe and headed to other markets. Last year, China competed with Japan for the world’s most car exports. Li Auto, which has long maintained a China-first strategy, announced last week that it would begin overseas deliveries by the end of this year after establishing local sales and service in the Middle East and Central Asia. Nio, which delivered just over 8,100 cars in February, announced last week that it had signed a technology licensing agreement with FourSeven, a subsidiary of Abu Dhabi-owned CYVN Holdings. Nio already sells cars in Norway and other parts of Europe. The company is expected to report fourth-quarter results before U.S. markets open on Tuesday. —CNBC’s Michael Bloom contributed to this report.
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