NIO Vs XPeng: Which Electric Vehicle Stock Is A Better Buy?

NIO stock is currently trading 41% below its record high and is valued at a market cap of $61 billion, indicating a forward price-to-sales multiple of 11.7x. Analysts tracking the stock expect NIO to increase its sales by  107% to $5.22 billion in 2021, while its revenue is forecasted to rise by 65% to $8.6 billion in 2022.

NIO might sell close to 100,000 vehicles this year and this figure could rise to 500,000 by 2025. These exciting growth prospects may explain why investors are bullish on NIO stock.

The bull case for XPeng

XPeng also more than doubled its vehicle deliveries in 2020 to 27,041. It recently introduced a sedan EV model, which is likely to drive future top-line growth. XPeng launched the P7 sports sedan at the start of 2020. The vehicle has surpassed 20,000 deliveries to date. In fact, it was China’s fastest EV vehicle to reach this landmark.

Earlier this month, XPeng launched its third production model, known as the P5 smart vehicle, which is equipped with LiDAR sensors. XPeng claims the P5 will be the first EV that will be mass-produced with automotive-grade LiDAR technology. LiDAR is a method for determining ranges (variable distance) by targeting an object with a laser and measuring the time for the reflected light to return to the receiver.

XPeng stock is currently valued at a market cap of $26 billion, indicating a forward price to sales multiple of 11.9x, which is similar to NIO. However, Xpeng is forecast to grow sales by 145.6% to $2.2 billion in 2021 and by 94% to $4.25 billion in 2022. These growth rates are significantly higher than NIO.  XPeng stock is also down 54% from record highs, making it attractive to contrarian investors.

The verdict

According to a report from BloombergNEF, EV sales in China crossed 1 million in 2020 and might touch 5 million by 2025, 10 million by 2030, and 20 million by 2040. NIO and Xpeng are poised to capitalize on this expanding, addressable market and currently account for an aggregate  7% market share of China’s EV market.

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