The Chinese electric vehicle (EV) market is heating up. However, this is attracting competition from traditional automobile manufacturers. Given the huge opportunity in the sector, let’s look at two high growth Chinese EV stocks, Li Auto (LI) and Niu Technologies (NASDAQ:NIU), that are part of this disruptive industry, to understand their respective prospects. Read on.So far this year, electric vehicle (EV) sector stocks have underperformed the broader market after generating staggering returns last year. It appears that investors have grown wary of the high valuation of growth stocks, and fears of rising inflation rates and increasing competition in the EV space have also contributed to the sell-off.
However, every correction can be viewed as a buying opportunity for investors with long-term horizons. So, here we look at two China-based EV stocks, Li Auto (LI) and Niu Technologies (NIU), to analyze which is a better bet right now.
China is the largest EV market in the world today. Total EV sales in the country were approximately 1 million units in 2020. EV sales are now forecast to rise to five million units by 2025, 10 million units by 2030, and 20 million by 2040. The increase in purchasing power of China’s middle class and a rapidly expanding addressable market are two key drivers of top-line growth for f Li Auto and Niu Technologies.