China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

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China/Asia TMT

Shawn Yang

Thematic (Sector/Industry)

China Automobiles and components / Thematic (Sector/Industry)

<ul>
<li>CPCA reported China’s 2022 EV sales of 6.49mn units, + 96.1% YoY, primarily driven by better market acceptance of EVs and favourable EV policies. </li>
<li>We think the fiercer competition will lead to divergence, which is already proven by Tesla’s price war. The followers such as Xpeng, could only be price takers and sacrifice margin.</li>
<li>We reiterate Li Auto as our top pick, as 1) better profitability; 2) positive growth outlook in 2023. We cut NIO’s TP to US$ 18.</li>
</ul>


CPCA reported China’s 2022 EV sales of 6.49mn units, + 96.1% YoY, primarily driven by better market acceptance of EVs and favourable EV policies. 
We think the fiercer competition will lead to divergence, which is already proven by Tesla’s price war. The followers such as Xpeng, could only be price takers and sacrifice margin.
We reiterate Li Auto as our top pick, as 1) better profitability; 2) positive growth outlook in 2023. We cut NIO’s TP to US$ 18.


China EV Outlook: 2023 Will Be a Year of Divergence