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On Monday, Bernstein shared insights into the Chinese electric vehicle (EV) sector, highlighting the country’s leading role in global EV adoption. According to Bernstein’s latest report, China now accounts for over 60% of worldwide EV sales, with domestic sales penetration exceeding 50%. The firm’s analysts project robust growth for the sector, forecasting a 25% increase in EV wholesale, including exports, to approximately 15 million units in 2025. They also predict that EV sales within China will reach around 13 million in 2025, resulting in a 60% sales penetration rate, a significant rise from 46% in 2024. This growth trend is already reflected in leading Chinese automakers like Geely, which according to InvestingPro data, has achieved impressive revenue growth of 28.5% over the last twelve months.
Bernstein’s analysts maintain a bullish stance on the Chinese EV market, anticipating that local brands will continue to outperform international competitors due to their strong value proposition and advanced technology. The report states that EV adoption in China surged in 2020, driven by the availability of affordable models with improved range and charging capabilities, alongside the popularity of Plug-in Hybrid Electric Vehicles (PHEVs). This market strength is evident in companies like Geely, which InvestingPro analysis shows is currently trading at an attractive P/E ratio of 7.9 and has delivered an impressive 89% return over the past year.
The firm expects that PHEV growth will surpass the overall market in the near term and that competition within China’s domestic market will remain fierce, potentially impacting pricing and profitability. However, they also see international markets as a significant opportunity for strategic growth. For investors seeking deeper insights into Chinese EV manufacturers’ valuations and growth potential, InvestingPro offers exclusive access to detailed financial metrics, Fair Value calculations, and over 10 additional ProTips for companies like Geely.
In terms of stock ratings, Bernstein has given Outperform ratings to BYD (SZ:002594), Xiaomi (OTC:XIACF), and Li Auto (NASDAQ:LI), while assigning Market-Perform ratings to XPeng (NYSE:XPEV) and NIO. Among traditional Chinese original equipment manufacturers (OEMs), Geely has also received an Outperform rating, with Great Wall, GAC, and SAIC being rated as Market-Perform. According to InvestingPro’s comprehensive analysis, Geely currently appears undervalued, with a "GREAT" financial health score and strong cash flow generation. The long-term outlook for EVs is positive, with expectations that China’s EV penetration could reach approximately 90% by 2030.
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