Sales of new energy vehicles (NEVs) – EVs and plug-in hybrids – soared 18% from October to 378,000 units in November, according to figures from the China Passenger Car Association (CPCA). That’s up 121% from a year earlier.
“NEV sales have been super strong,” said Cui Dongshu, secretary general of the CPCA. “The penetration of EVs is no longer counting on government subsidies, but rather on market demand.”
The industry has been boosted by Chinese Government support for EVs and public charging infrastructure, as it chases carbon emission reduction targets as well as a more affluent middle class.
Demand for EVs surges
Demand is being met predominantly by the Warren Buffett-backed Chinese carmaker BYD [1211.HK] – the market share leader with 18% – which racked up just over 90,000 sales last month.
Elon Musk’s Tesla, with a 10% share, sold 52,589 China-made vehicles out of its Gigafactory in Shanghai – including just over 21,000 for export and over 31,000 for Chinese drivers.
This marked a decline from October, when Tesla sold 54,391 China-made vehicles, and September when it sold a record 56,000. However, the number is up 348% year-over-year. It also marks the third month in a row, according to the Electrek website, with an output of over 50,000 EVs.
The SGMW joint venture, which includes General Motors [GM], has a 15% share and racked up sales of just over 50,000 in November. Xpeng recorded 15,613 sales, up 270% year-over-year, and up 54% from October.
Nio [NIO] delivered 10,878 cars – a monthly record – up 106% from the same month last year and up 197% from October.
Li Auto [LI] delivered 13,485 units of the Li One – its only model – which is a new monthly delivery high. This is a 190% a year-on-year increase and up 76% in October.
Volkswagen’s ID. range of EVs sold 14,167, up 11% in October.
As of November, 2.5 million electric vehicles had been sold in China this year, up 178% year-over-year, and a huge slice of the forecasted 6 million global sales for 2021, according to the Motley Fool.
Tesla’s share price dives
Share prices of major players have not moved a great deal, with the exception of Tesla, which recorded a 12% drop following Elon Musk’s announcement that he intended to sell 10% of his shares.
Analysts remain bullish about Tesla’s long-term prospects. New Street Research analyst Pierre Ferragu, as reported by Nasdaq, has ‘buy’ rating on Tesla stock and recently upped the price target from $1,298 to $1,580.
Ferragu said: “Multiple strong catalysts in 2022 can drive shares higher in coming months. Those include an upside fourth quarter, strong production from Tesla’s Shanghai facility, new production capacity coming online in Germany and Texas, and new batteries for Tesla EVs.”
Nio’s share price growth
Another analyst pick is Nio, which, according to MarketScreener, has a ‘buy’ rating. Writing in the Motley Fool, Sean Williams suggests that Nio’s production ramp-up looks strong, suggesting that it could hit 600,000 vehicles on an annual run-rate basis. He also likes its plans to launch three new vehicles next year and its battery-as-a-service solution.
Overall, the Chinese EV market is in a good place, recovering – it appears – from the semiconductor shortage which has hit production both there and around the world.
The forecasts for continued future growth also look positive.
As reported by Seeking Alpha, BloombergNEF estimates that the NEV share of total China car sales will reach 25% in 2025, up from just 6% in 2020.
There are challenges ahead, such as the impact of an Evergrande default on the Chinese economy, and social political issues around Taiwan and the supply of semiconductor chips.
But China, propelled by a green drive and rampant competition, will likely keep motoring higher. That momentum should be a boon for all the key stocks – including Tesla.
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