Macquarie Equity Research resumed coverage of China electric vehicle stocks Li Auto Inc . (NASDAQ:LI) with an Outperform rating and NIO Inc. (NIO) and XPeng Inc. (NYSE:XPEV) with Neutral ratings in a note on Monday.
The firm stated that with consolidation looming, EV players will be defined by this year's battle in the Rmb200-300k ($28 to 40k) premium-mass segment, targeting Tesla, where they are seeing a raft of highly competitive model launches.
"China's EV market is now well past the early adopter stage of the S-curve and firmly into mass adoption. This shift means previously niche start-up EV pure plays need to chase volume in the mass market," analysts explained.
Analysts added: "Branding, powertrain options, and broad sales channels are key factors to decide which local OEM models can compete vs the Model Y."
Macquarie prefers Li Auto out of the stocks covered based on its product positioning in the fast-growing EREV adoption and consumer trade-up trends.