The automotive industry experienced a rough phase last year. However, the increasing cost of fossil fuels and government initiatives to transition to a zero-emission environment should keep driving the electric vehicle (EV) industry’s growth. In addition, rising investments from automakers and the expansion of charging infrastructure are expected to play major roles in driving the EV market’s growth.

China, which is considered the global leader in the production and sale of EVs, saw an explosion of EV consumer uptake this year, with a 177.6% increase in EV adoption year-over-year. The November sales of new-energy vehicles in China grew 16.8% over the past month.

Given this backdrop, we think it could be worth adding Chinese electric vehicles stocks NIO Inc. (NIO), XPeng Inc. (XPEV), and Li Auto Inc. (LI) to one’s watchlist. Wall Street analysts expect them to rally by more than 50% in price in the near term.

Click here to checkout our Electric Vehicle Industry Report for 2021

NIO Inc. (NIO)

Headquartered in Shanghai, China, NIO designs, develops, manufactures, and sells smart electric vehicles in China. The company’s NIO Power provides mobile internet-based power solutions for battery charging and battery swap facilities. NIO markets and designs technology development activities, and manufactures e-powertrains, battery packs, and components.

For the third quarter, ended September 30, 2021, NIO’s total revenues increased 116.6% year-over-year to RMB9.81 billion ($1.54 billion). The company’s gross profit grew 240.2% from its  year-ago value to RMB1.99 billion ($313.01 million). Its net loss decreased 20.2% from the prior-year quarter to RMB835.3 million ($131.18 million). Also, the company’s vehicle sales increased 102.4% year-over-year to RMB8.64 billion ($1.36 billion).

NIO’s revenue increased 120.3% year-over-year to $5.62 billion in its fiscal 2021. And its EPS is expected to grow 71.1% next year.

Closing the last trading session at $30.79, the average analyst price target of $60.67 for NIO represents a 97% potential upside.

XPeng Inc. (XPEV)

Headquartered in Guangzhou, the People’s Republic of China, Smart electric vehicle company XPEV’s primary products include environmental-friendly vehicles, an SUV (the G3), and a four-door sports sedan (the P7). The company also provides sales contracts, maintenance, supercharging, vehicle leasing, and ride-hailing services.

In November, XPEV unveiled its new G9 flagship smart SUV that incorporates its latest state-of-the-art software architecture and hardware platform. The G9 is the company’s fourth production model and has been designed for both domestic Chinese and international markets.

During the third quarter, ended September 30, 2021, XPEV’s total revenues increased 187.4% year-over-year to RMB5.72 billion ($898.26 million). The company’s gross profit grew 796.7% from the year-ago value to RMB820.82 million ($128.9 million). And its cash and cash equivalents came in at RMB15.39 billion ($2.42 billion) during the period.

XPEV’s revenue is expected to increase 249.5% year-over-year to $3.17 billion in its fiscal 2021. Its EPS is estimated to grow 24.4% in the current year. The stock has surged 13.3% in price over the past three months and 22.1% over the past nine months.

The consensus price target of $73 represents a 69.1% potential gain from XPEV’s last closing price of $43.18.

Li Auto Inc. (LI)

Formerly known as Lead Ideal Inc., LI is a Beijing, China-based new energy passenger vehicles (NEV) automaker that designs, develops, manufactures, and sells smart electric vehicles. The company also offers Li ONE, a six-seat electric SUV equipped with a range of extension systems and smart vehicle solutions.

LI’s total revenues increased 209.7% year-over-year to RMB7.78 billion ($1.22 billion). The company’s gross profit grew 264.8% from its year-ago value to RMB1.81 billion ($284.55 million). And its net loss decreased 79.9% from the prior-year quarter to RMB21.51 million ($3.38 million).

Analysts expect LI’s revenue to increase 174.9% year-over-year to $4.01 billion for its fiscal 2021. Its EPS is estimated to increase 71.4% in the current year. Moreover, the stock has gained 20.9% in price over the past nine months.

Closing its last trading session at $30.44, the average analyst price target of $49.99 for LI represents a 64.2% potential upside.

Click here to checkout our Electric Vehicle Industry Report for 2021

NIO shares were trading at $29.99 per share on Thursday afternoon, down $0.80 (-2.60%). Year-to-date, NIO has declined -38.47%, versus a 26.63% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

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