Barclays analyst Jiong Shao recently gave Weilai Automobile, Xiaopeng Automobile, and Ideal Automobile, three new Chinese car-making forces, "overweight" ratings.
"The Motley Fool" reported that Shao said that with the rapid popularity and hot sale of electric vehicles around the world, it has brought rare opportunities to the three Chinese electric vehicle manufacturers. China is the world's largest auto market, and the development of electric vehicles is one of China's "most supportive and well-thought-out policy agendas." Huge profits are prompting Chinese EV manufacturers to invest heavily in technology and manufacturing capabilities to stay ahead of the curve, and China's highly developed parts supply chain has enabled EV start-ups to scale up rapidly.
The European Association of Automobile Manufacturers (ACEA) announced on February 2 that the number of EU electric vehicle registrations will increase by 63.1% per year to 878,432 units in 2021, and the market share will rise from 5.4% to 9.1%. On January 11, the China Association of Passenger Vehicles raised its 2022 new energy passenger car sales forecast by 14.6% from 4.8 million units to 5.5 million units, and the estimated penetration rate will reach about 25%.
Shao said who will be the ultimate winner and loser of smart cars is determined by the innovative capabilities of autonomous driving and automotive robotics. Many of China's leading car companies have begun to enter the European market, and these three new car-making forces not only have the opportunity to win a fairly high market share in China, but also are expected to gain dominance in the global market.
Therefore, Barclays's stock target prices for NIO, Xiaopeng Motors and Ideal Automobile are $34, $45 and $38, respectively.
NIO rose 5.71 percent to close at $26.21 on Feb. 9, Ideal Wasa rose 3.90 percent to close at $30.13, and Kopeng Rose 9.58 percent at $40.73.
Barclays Research Report analysis, from the perspective of technological differentiation, NIO is more focused on battery technology, and has established a strategic partnership with battery giant CATL times to jointly develop the latest technology to produce supporting batteries for NIO. In addition, NIO also provides users with highly innovative power exchange and battery rental solutions.
NIO initially focused its customer base on the high-end market, which gave the company a head start, because China's high-end consumers were indeed one of the first to use electric vehicles. For NIO, launching mass-market-related products over the next two years will be crucial.
In order to build better smart cars, the most comprehensive data covering all road conditions is needed. If NIO is still stuck in the high-end market and cannot have a large amount of mass market data, then competitors' car sales will far exceed THATOs.
Some investors are concerned that NIO's capacity growth is not as fast as Xiaopeng and Ideal, but Shao pointed out that since NIO plans to double the capacity of its existing plants in March, this concern should be alleviated. In addition, its second plant will be put into production in the third quarter. As capacity expands, NIO's deliveries will accelerate later this year.
He also pointed out that THERE are two risks that NIO may face in the medium term: First, it may not be able to successfully transform into a mass-type electric vehicle manufacturer, which requires a different thinking and strategy from high-end electric vehicle manufacturers. NIO needs to do a good job in this transformation, not only from the perspective of product positioning, but also from the perspective of customer service and operations.
Another major risk is that if competitors can get more driving data and develop better advanced driver assistance systems, NIO may fall behind in self-driving technology. Most of the "superficial" functions of the car are not difficult to imitate, but the core assisted driving technology is the real competitive moat.
In contrast, Xiaopeng Motors, Shao believes that product price and ADAS technology provide it with a strong and tangible value proposition, which can become a long-term differentiation advantage. Xiaopeng Motors has a unique opportunity because the sale of affordable cars may drive sales, which in turn will facilitate the collection of ADAS data. In addition, Xiaopeng has adopted a mixed business approach, including some own stores and some third-party distributors, which is a wise sales channel approach given the market positioning of the product.
The ideal car has captured the pulse of consumer preferences, and future models will achieve similar success. Shao believes that the ideal car can effectively target different Chinese families with a single model, achieving a precise balance between practicality, luxury, endurance and price.
On February 1, Weilai, Xiaopeng and Ideal handed over the delivery report card of January 2022, and in that month, Xiaopeng ranked first in the list of new forces with 12,922 units of delivery, and its sales target for 2022 was set at 250,000 vehicles, and it was impacted by 300,000 vehicles. The new Xiaopeng G9 will start small-scale delivery at the end of August. Based on rising orders and market growth expectations, Xiaopeng Motors plans to upgrade the Zhaoqing base during the Spring Festival shutdown period from the end of January to the beginning of February, which will drive faster delivery speed after the completion of the transformation.
Ideal ONE delivered 12,268 units, setting a new delivery record for a Chinese brand luxury model with a starting price of more than 300,000, and the Ideal X01, positioned as a large 6-seat SUV, will be officially launched this year.
NIO delivered 9,652 units, up 33.6% year-on-year. As of the end of January 2022, NIO vehicles have delivered a total of 176,722 units. 2022 is an important year for NIO, with the delivery of three new NT2.0 models, smart cockpit upgrades for existing models, NAD autonomous driving applications, and 150-degree solid-state battery deliveries; the commissioning of the second production base in Hefei Xinqiao; and the start of providing full-system services in four European countries after Norway. Although it still faces many challenges, with the growth of system capabilities, NIO is still confident of achieving its goals.