If sales continue up the S-curves, EVs will make up between 62 percent and 86 percent of global car sales by 2030, with China's EV market share reaching at least 90 percent.
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Following a price cut and a slew of new models, Nio's sales efficiency has improved materially and should maintain this level of demand for at least the rest of the third quarter, said Edison Yu's team.
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The IEA now expects China's gasoline demand to peak in 2024, bringing forward previous forecasts of demand leveling off in 2025/2026.
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Morgan Stanley raised its price target on Nio to $18.7, on Xpeng to $25.4, and on Li Auto to $53, all keeping their ratings at Overweight.
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Volkswagen's deal with Xpeng could be the first of many strategic partnerships between global automakers and Chinese EV startups, Morgan Stanley said.
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It's another sign that China's auto industry is changing rapidly and becoming hyper competitive, forcing major changes at traditional OEMs, Edison Yu's team said.
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Buying a BEV platform in China could be one of the "big bangs" needed for Volkswagen stock to break out of what can by now only be characterized as being largely ignored by many of the largest asset managers globally, Deutsche Bank said.
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Goldman Sachs believes the market has yet to fully reflect the potential of the G6, with the model ranking No.1 among comparable models, and which is the most competitive product released by Xpeng to date.
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Chinese automakers have now crossed the inflection point for global influence, with local brands expected to hold 65 percent of the market share in China by 2030, AlixPartners said.
China, the world's largest auto market, has been dominated by foreign brands for many years, but that is about to change with the rapid growth of local brands in the past few years.
This year, China will become the world's largest auto exporter, and for the first time, local brands are expected to overtake overseas brands in market share, AlixPartners, a New York-based consulting firm, said in a report yesterday.
Chinese automakers have now crossed the inflection point for global influence, with local brands expected to hold 65 percent of the market in China by 2030, said Stephen Dyer, co-head of AlixPartners Greater China.
In the first half of 2020, local brands' monthly share of the Chinese auto market was at slightly more than 30 percent, with German and Japanese brands then at around 30 percent and 25 percent, respectively, according to the China Passenger Car Association (CPCA).
In October 2022, the share of local brands in the Chinese auto market reached 51.53 percent, the first time in history that the monthly share exceeded 50 percent, according to data monitored by CnEVPost.
While local brands are on the rise, foreign brands are gradually declining. In October last year, the share of German brands fell to 19.25 percent and Japanese brands fell to 18.94 percent.
In the first five months of this year, the share of local brands has remained at around 50 percent, including 50.24 percent in May, according to the CPCA.
Chinese automakers are poised to become a dominant force in the global auto industry in the coming years, thanks to government support for new energy vehicle (NEV) companies, automakers' focus on vehicle styling and customer orientation, and the accelerating pace of NEV launches, according to AlixPartners.
The business models evolved by Chinese automakers are also likely to be successful in Europe and the US, and Chinese automakers will become a dominant force in the global auto industry in the coming years, the report said.
However, industry disruption from Chinese manufacturers won't necessarily make quick waves in overseas markets as traditional car companies around the world are focused on dealing with the impact of innovation from Tesla, the report also noted.
The success of Chinese NEV brands provides a reference for global automakers, AlixPartners said, adding that local brands are better able to meet the needs of a new generation of tech-savvy consumers while maintaining a strong value for money and offering a better digital marketing experience than joint venture brands.
Models that are popular with Chinese consumers are also increasingly likely to be popular with global consumers, and multinational automakers must be prepared to fundamentally change their working models as Chinese-style competition eventually comes to their home markets as well, the report said.
AlixPartners expects auto sales in China to grow 3 percent in 2023 and then maintain a slow but steady pace to reach a level of 50 million units around 2050.
Retail sales of passenger cars in China were 20.54 million units in 2022, up 1.9 percent year-on-year, with NEVs contributing 5.67 million units, or 27.6 percent, according to the CPCA.
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After the price cut and a series of new models, Nio sales could reach 20,000 units per month in the third quarter, according to Edison Yu's team.
China's major electric vehicle (EV) makers recently announced their June deliveries, and Deutsche Bank analyst Edison Yu's team provided their take, as usual.
"June EV sales surprised to the upside as demand picked up, likely signaling some normalization in consumer behavior and release of pent-up demand from buyers taking advantage of low prices," the team said in a research note sent to investors today.
Li Auto (NASDAQ: LI) again led the way among the upstarts, setting a new monthly record, while Nio (NYSE: NIO) saw a large improvement in monthly sales, driven by the speedy ramp-up of the ES6, the team noted.
Looking ahead, pressure will be on Nio and Xpeng (NYSE: XPEV) to deliver big growth in the second half with new vehicle launches, while Li Auto works to increase its already strong order book, Yu's team said.
As a backdrop, Nio delivered 10,707 vehicles in June, up 73.96 percent from 6,155 in May, though down 17.39 percent from 12,961 a year earlier.
Xpeng delivered 8,620 vehicles in June, up 14.84 percent from May and the fifth sequential growth, despite a 43.64 percent decline from the same month last year.
Li Auto delivered a record 32,575 vehicles in June, surpassing the 30,000 mark for the first time.
Zeekr delivered 10,620 vehicles in June, up 146.86 percent year-on-year and up 22.38 percent from May.
Yu's team said Nio deliveries were slightly below their forecast, though the new ES6 appears to be ramping up smoothly and should be a bigger contributor in July along with the full month of production of the ET5 Touring.
After the price cut and a slew of new models, Nio could reach 20,000 units per month in the third quarter, the team said.
The team said Xpeng deliveries exceeded their expectations and, most importantly, the initial reception to the new G6 looks increasingly positive.
Looking ahead, Xpeng is on track to hit at least 10,000 deliveries in July and 15,000 in September is doable, the team said.
Here is the full text of the team's research note.
June gathering momentum
June EV sales surprised to the upside as demand picked up, likely signaling some normalization in consumer behavior and release of pent-up demand from buyers taking advantage of low prices.
Total NEV retail sales appear to be tracking around 670k according to preliminary CPCA forecasts or +16 percent MoM (+26 percent YoY).
Li Auto once again led the way among the upstarts setting a new monthly record while Nio saw a large improvement MoM driven by speedy ramp up of ES6.
Looking ahead, the pressure will be on Nio and XPEV to deliver big growth in 2H from new launches while Li Auto strives to increase its already robust order book.
June OEM recap
Li Auto delivered 32,575 vehicles (+15 percent MoM; +150 percent YoY), easily beating our forecast. Looking ahead, management is targeting L8 and L9 to be +10,000 each and L7 at 15,000 in monthly sales for 3Q and then 40,000 total in 4Q.
To support this, we are expecting a cheaper variant of the L9 to be available later in the year.
Separately, the first BEV (Li MEGA) is set to be unveiled in 4Q, catering to the >500k RMB segment.
The company exited the month with 331 retail stores and 323 servicing centers.
Nio delivered 10,707 units (+74 percent MoM; -17 percent YoY), slightly below our forecast.
The new ES6 appears to be ramping up smoothly and should be an even bigger contributor in July along with a full month of ET5 Touring production. New ES8 deliveries also began in the last few days of June.
Following the price cut and slew of new models, we think 20,000 in monthly sales is achievable during 3Q.
Nio exited the month with ~1,500 battery swap stations.
XPeng delivered 8,620 units (+15 percent MoM; -44 percent YoY), ahead of our expectations. P7 sales increased 17 percent MoM to nearly 5,200.
Most importantly, the initial reception to the new G6 is looking increasingly positive.
Starting price will be just 210k RMB and management raised its pre-sale number to +35,000 units (vs. prior +25,000), suggesting a robust pipeline of deliveries for 3Q.
Looking ahead, we expect July can reach at least 10,000 deliveries and 15,000 in September is doable.
Zeekr delivered sales of 10,620 vehicles (+22 percent MoM; +147 percent YoY). Looking ahead, Zeekr is offering some promotions through September on the 001 (likely in response to ET5 Touring competition) including free upgrade options on exterior color, larger 100 kWh battery, dual-motor 4WD, air suspension, and/or charging credits.
In addition, the company is providing special financing offers on all models.
Recall, Zeekr is targeting 140,000 in total unit sales this year (<43,000 through 6 months so far).
Nio deliveries rebound to 10,707 units in Jun as new models bring relief
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