When will the new energy vehicle industry usher in an explosion? These 3 electric vehicle stocks are worth paying attention to

The Trend: Why Electric Vehicle Stocks Have Become a New Investment Hotspot

From the PC era to the smartphone wave, and now to the new energy vehicle revolution, these transformative industries consistently bring sustained growth opportunities to the capital markets. As global commitments to carbon neutrality deepen and governments worldwide set timelines for phasing out internal combustion engine vehicles, the electric vehicle market is entering a golden period similar to the early days of the automotive industry in the last century.

According to the latest market data, this sector has attracted numerous companies crossing over from other industries, including traditional automakers transforming themselves and new entrants innovating boldly. However, increased supply also brings new challenges: rising raw material costs, pressure on end-user prices, and intensifying industry competition. In this “elimination race,” companies that master the complete supply chain, have sufficient capital support, and can control costs are more likely to succeed.

Global Electric Vehicle Stock Landscape: Who Are the True Industry Leaders?

Tesla’s First-Mover Advantage and Concerns

When it comes to leading electric vehicle stocks, Tesla is unavoidable. This company entered the market with high-performance sports cars, establishing a premium brand positioning. It then gained industry influence through open patents and expanded rapidly with carbon credit subsidies and national incentives. After turning profitable in 2020 and being included in the S&P 500, its stock price soared several times.

Tesla currently holds a 21% share of the global electric vehicle market. With a highly automated production system, its net profit margin reaches about 15%—far above its peers. However, this advantage is being eroded. Data from the first quarter of 2023 shows BYD’s sales growth exceeded 100%, while Tesla’s was only 50%, especially in the Chinese market. It is expected that by 2025, Tesla’s market share in North America will continue to decline, as low-cost competitors intensify their impact.

BYD’s Complete Ecosystem and Long-Term Potential

BYD started with battery R&D and now owns the most complete new energy vehicle supply chain. This Chinese company has been listed and profitable until this year, ranking second globally in market share, but first domestically. Although its gross profit margin of 20% is comparable to Tesla’s, its operating profit margin is noticeably lower, mainly due to its broad industry involvement, higher personnel costs, and benefits primarily from the Chinese market rather than global policy dividends.

However, disadvantages also hide opportunities: BYD is gradually expanding into overseas markets and planning overseas manufacturing plants. Warren Buffett’s recent reduction in holdings may be a short-term negative, but from a long-term investor perspective, its valuation is relatively low, and growth potential is greater. Especially with the high-speed growth forecast in China over the next 3-5 years, once overseas markets stabilize, this company’s growth trajectory is worth watching.

The Differentiation of New Entrants: Who Will Survive to the End?

Li Auto, NIO, and Xpeng are all new car-making forces established around 2014-2015, backed by Meituan, Tencent, and Alibaba respectively. They target different customer groups: NIO for over 400,000 RMB, Li Auto around 350,000 RMB, and Xpeng below 200,000 RMB.

The key difference lies in profitability. Currently, only Li Auto has turned profitable; NIO and Xpeng are still burning cash. Although NIO’s growth is faster with a smaller base, its smart platform advantages supported by Tencent may help it break through the mid-to-high-end market. Xpeng’s low-price strategy aims to capture market share; if this approach continues to underperform, it risks falling into a “losing money to gain fame” dilemma.

Current State of Electric Vehicle Stocks: Challenges and Opportunities Coexist

Supply and Demand Imbalance Tests True Competitiveness

The industry has shifted from incremental competition to stock competition. Industry analysis indicates that the new energy vehicle market is currently oversupplied, and the next 3-5 years will be a period of true survival of the fittest. Upstream raw material suppliers are raising prices, but end consumers are resistant to price hikes, making cost control capabilities a matter of life and death for companies.

Intelligentization Becomes the New Battlefield

With autonomous driving technology still below Level 2, the ecosystem experience of smart cockpits, vehicle connectivity, and services like charging stations and parking lots has become a key differentiator. Whoever controls the smart platform ecosystem will hold the future discourse power.

Infrastructure Shortcomings Need Addressing

Insufficient charging station density remains a constraint. Compared to the widespread presence of gas stations, charging stations—especially in communities and apartments—are severely lacking, directly affecting consumer purchasing decisions. Policy support and corporate efforts are both needed.

Why Invest in Electric Vehicle Stocks Now?

The electric vehicle market has two key elements of the “snowball theory”: enough moist snow (demand driven by global carbon neutrality policies) and a sufficiently long slope (sustainable growth over the next 10-30 years).

Compared to saturated markets like smartphones and computers, the electric vehicle industry is still in its explosive growth phase. This is not only a business opportunity but also a historic moment witnessing an industrial revolution. Companies with complete layouts, efficient management, and ample capital will achieve exponential growth in this wave.

Key Considerations for Investing in Electric Vehicle Stocks

1. Supply Chain Completeness: Companies with strong vertical integration are more resilient
2. Profitability: Don’t be fooled by high growth; real profit margins are the moat
3. Regional Advantages: China remains the largest growth driver; overseas expansion is a plus
4. Financial Backing: Ability to raise funds to support product iteration and market expansion
5. Technological Reserves: Long-term competitiveness indicators like smart tech and battery technology

Although the market is more volatile now, the long-term upward trend of the electric vehicle industry is confirmed. Grasping industry cycles and choosing true leaders is the core strategy to navigate through the cycles.