The electric vehicle (EV) revolution is here to stay – and it’s not contained to just one country or continent.
Indeed, investors should open their minds and consider looking abroad, as China is among the world’s biggest economies and it has a vast middle class.
Furthermore, China’s government is friendly towards clean-energy initiatives. This puts EV companies at an advantage in this highly populated nation.
For investors, some folks might say that the most obvious way to capitalize on China’s EV industry is through a position in Nio (NIO). However, the smaller but equally ambitious automaker Xpeng (XPEV) could provide some serious competition to Nio.
So, let’s compare them head-to-head and perform an EV stock comparison to see which one could win the race to capture the Chinese EV market.
With a market capitalization of $47.7 billion, Nio has a huge presence in China’s EV industry.
It’s not difficult to figure out why Nio is so dominant. The company is growing according to practically every important metric.
Let’s take the company’s top-line results, for example. In the third quarter of 2021, Nio’s revenues totaled 9.8 billion RMB ($1.5 billion in U.S. currency), representing a year-over-year increase of 116.6% and a quarter-over-quarter increase of 16.1%.
Nio was also in a firm capital position, with cash and cash equivalents, restricted cash and short-term investments of 47 billion RMB ($7.3 billion) as of September 30, 2021.
Here’s the only major sore spot in the fiscal results: Nio sustained a net earnings loss of 835.3 million RMB ($129.6 million) in 2021’s third quarter. So, there’s room for improvement there.
Still, it’s indisputable that Nio has been selling plenty of its EVs lately. Specifically, the company delivered 10,878 vehicles in November 2021, signifying a year-over-year increase of 105.6%.
With all of that in mind, let’s see what Wall Street has to say about Nio.
According to TipRanks’ analyst rating consensus, NIO is a Strong Buy, based on eight Buy and one Hold ratings. The average analyst Nio price target is $60.67, implying 102.2% upside potential.
Can Xpeng compete with Nio’s outstanding stats? Let’s find out now.
Compared to Nio’s $47.7 billion market capitalization, Xpeng’s $35.7 billion is certainly smaller but still sizable.
Moreover, if you assumed that Nio’s financial and EV delivery results were superior, think again.
According to Xpeng’s third-quarter 2021 financial results, the company generated $5.7 billion RMB in total revenues, for a 187.4% year-over-year increase as well as a 52.1% quarter-over-quarter improvement.
Also, Xpeng held cash and cash equivalents, restricted cash, short-term deposits, short-term investments, and long-term deposits worth 45.4 billion RMB ($7 billion) as of September 30, 2021 – not too shabby.
Now, it is true that Xpeng sustained a net earnings loss of 1.6 billion RMB ($247.5 million) during 2021’s third quarter. Therefore, both Nio and Xpeng should strive to improve in this area.
As far as the company’s November EV deliveries are concerned, Xpeng is accelerating quickly. During that month, Xpeng delivered 15,613 vehicles, representing a tremendous 270% year-over-year increase.
Next, let’s see how Wall Street feels about Xpeng’s prospects.
According to TipRanks’ analyst rating consensus, XPEV is a Strong Buy, based on five unanimous Buy ratings. The average analyst Xpeng price target is $73, implying 74.8% upside potential.
Which One’s the Winner?
Both Nio and Xpeng represent Strong Buys in the Chinese EV industry.
Yet, it’s clear that the financial and EV delivery data, while impressive for both companies, tend to favor Xpeng.
Whichever one you choose – and honestly, it’s fine to invest in both NIO and XPEV stocks – you’ll be driving in the fast lane with China’s burgeoning EV market.
Disclosure: On the date of publication, David Moadel had no position in any of the companies discussed in this article.
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