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A rendering of Tesla Superchargers
Justin Sullivan / Getty Images
Tesla
recently published prices for the China-made Model Y. It’s a little more affordable than some of the competition. That’s good news for Tesla bulls, but it could be bad news for the competition.
Tesla (ticker: TSLA) is selling the Model Y manufactured in Shanghai for a base price of 339,000 yuan or about $ 52,000. Priced lower
NIO
(NIO) EC6 crossover vehicles start at 368,000 yuan.
The
XPeng
(XPEV) G3 starts for less money, but it’s a lower performance car. The G3 lists its time to accelerate from 0 miles per hour to 100 miles per hour at approximately nine seconds. A comparable model Y achieves that speed in about five seconds.
The
Li Auto
(LI) Li ONE SUV starts at around 328,000 yuan. “With the Li ONE, we want to … become the best-selling model in its price segment [the 300,000 to 350,000 Yuan] price segment, ”said Kevin Shen, president of Li Auto, at the companies’ recent conference call.
Tesla, in turn, can cut costs by increasing local production in China. “We are also seeing benefits from the continued upward trend of locally built and delivered cars, which has increased from less than 50% early last year to more than 70% recently,” Tesla Chief Financial Officer Zachary Kirkhorn said of the recent third quarter results conference all .
The China-built Model Y was approved for sale in China in late November. Tesla also makes model 3 sedans in China.
CEO Elon Musk recently said it is important to keep lowering vehicle prices. “I don’t think we lack desire for our product, but we lack affordability,” Musk said on the recent conference call.
Price cuts and competition have not hurt EV stocks. The shares of XPeng, NIO and Li Auto – along with Tesla – delivered incredible returns in 2020. For example, shares of NIO were up about 1,110%, beating Tesla’s massive profit of 743%.
Despite the competition and the stock price performance, China’s EV stocks are still popular with analysts. More than 60% of the analysts covering all three companies rate the stock at Buy. The average Buy rating ratio in the Dow is approximately 57%.
Barron’s is more cautious, recently writing that Chinese EV manufacturers’ valuations are too high, suggesting investors are taking a profit. That article appeared in mid-December.
XPeng is trading for about 15 times its estimated sales in 2021. NIO and Li Auto are trading about 15 times and 8 times its estimated sales for 2021, respectively. Tesla, for comparison, is trading at about 14.5 times its 2021 sales.
The three Chinese EV manufacturers are expected to report delivery figures in early 2021.
Write to Al Root at [email protected]