Li Auto Vs. Geely: Which Chinese Electric Vehicle Stock Is A Better Buy?

If you are an avid growth investor, the disruptive electric vehicle (EV) industry is one that should be on your radar. While EV stocks were on an absolute tear in 2020, concerns over steep valuations and rising competition have driven share prices lower in 2021. However, the pullback provides investors an opportunity to buy these stocks at lower valuations.

China is the largest EV market in the world, making stocks such as Li Auto (LI - Get Rating) and Geely (GELYY - Get Rating) interesting investments for 2021 and beyond. According to a research report from Canalys, China’s EV sales stood at 1.3 million units in 2020, accounting for 41% of total sales. In 2021, EV sales might grow by 51% year over year to 1.9 million units in China. Further, EV sales will account for over 10% of total passenger car sales by 2025, up from less than 3% in 2020.

Keeping these growth rates in mind, let’s see which between Li Auto and Geely should be part of your portfolio today.

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Li Auto

Shares of Li Auto have gained close to 50% since its IPO last year. However, the stock is also down 45% from record highs. In the first quarter of 2021, the company reported sales of $545.7 million ahead of Wall Street revenue estimates of $522.5 million. However, its adjusted loss per share stood at $0.03 which was worse than consensus estimates of a loss of $0.02 per share.

Li Auto ended Q1 with 65 retail stores and 135 service centers allowing the company to increase its deliveries by 4x to 12,579 units.

Last month, the company also launched a new model of its best-selling car Li ONE. The latest vehicle is equipped with advanced safety features and will be a key revenue driver for the Li Auto. The company has forecast Q2 deliveries between 14,500 and 15,500 units, allowing it to generate anywhere between $609 and $651 million in revenue. Comparatively, analysts forecast Q2 sales at $704.5 million and have since revised their top-line estimates to $671 million in Q2.

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