Despite sobering share-price retreats this year, EV manufacturers NIO (NIO) and XPeng (XPEV) continue to trade at expensive valuations. However, their lofty metrics are supported by robust growth and a rapidly expanding market. But which of the two companies is the better buy now? Let’s find out. Read on.Investing in a high-growth industrial segment carries significant risks. Market dynamics are such that sectors with exciting growth prospects attract competition like bees to honey, and companies with considerable resources can deploy sufficient capital to gain great traction in new markets quickly. For example, Fitbit (NYSE:FIT) was once a market leader in the wearables space. But several tech giants, including Apple (NASDAQ:AAPL) and China’s Xiaomi (OTC:XIACF), bundled into the sector, quickly impacting Fitbit’s top-line growth.
In the last year, companies in the electric vehicle (EV) sector crushed the broader markets as the transition towards clean energy vehicles gained pace globally. This transition will accelerate in the coming decade and has already attracted the attention of legacy manufacturers such as Volkswagen (DE:VOWG_p) and BMW.
Nevertheless, two EV companies we think investors should analyze carefully in this disruptive segment are China-based manufacturers NIO (NIO) and XPeng (XPEV). Let’s analyze to see which stock is a better buy right now.