3 Chinese Electric Vehicle Stocks To Avoid In October

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The global electric vehicle (EV) industry has achieved significant growth thanks to favorable government policies to address increasing climate change concerns. According to a Fortune Business Insights report, the global EV market is expected to grow at a 24.3% CAGR over the next seven years. In addition, China’s central government would like 20% of new cars sold by 2025 to be electrically powered.

However, most Chinese EV stocks declined in price recently after Chinese Industry and Information Technology Minister Xiao Yaqing said consolidation in the sector is needed because there are “too many” EV makers in China. Furthermore, the EV industry is being negatively affected by the current, global, semiconductor shortage, which is expected to persist for some time.

Against this backdrop, we think it could be wise to avoid Chinese EV stocks BYD Company Limited (BYDDY), XPeng Inc. (XPEV), and Kandi Technologies Group, Inc. (KNDI). Their current valuations are not in sync with their growth prospects.

BYD Company Limited (BYDDY)

Based in Shenzhen, China, BYDDY is developing, manufacturing, and selling automobiles and related products worldwide. It operates through three segments: Rechargeable Battery and Photovoltaic Products; Mobile Handset Components and Assembly Service; and Automobiles and Related Products.

On September 8, BYDDY launched its e-Platform 3.0 for pure EVs to promote neighborhood electric vehicles’ (NEVs) safe performance and low-temperature driving and to build safer and new intelligent EVs. However, it’s uncertain if the company will generate significant demand for this service amid the intensely competitive environment.

BYDDY’s total operating revenue for the six months ended June 30, 2021, came in at RMB89.13 billion ($13.80 billion), up 53.6% year-over-year. However, its gross profit decreased 5.3% year-over-year to RMB 9.92 billion ($1.54 billion). Its total comprehensive income decreased 25.7% year-over-year to RMB 1.63 billion ($252.11 million). Also, its EPS came in at RMB 0.41, down 26.8% year-over-year.

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William K. 1 month ago Member's comment

Given the recent actions of the top government in China, it makes sense to wait and see what comes next. China is certainly not like the US!

Craig Newman 1 month ago Member's comment

I think it's nonsense.  When XPENG should fall in October I will buy more XPENG stocks. P5 is coming at the end of October.

William K. 1 month ago Member's comment

Really, given the ststed policies of the Chinese government, it would be smart to back off a few dozen miles at least until the dust settles and the smoke clears away. The times are indeed changing and so far the results do not look that good.