Bernstein released an analysis of the recovering Chinese auto industry following the COVID pandemic which led to extended lockdowns and supply chain interruptions and found that the electric vehicle industry, as a whole, remains resilient.
Bernstein analysts wrote in a note, “We are turning more positive on China's auto cycle and hold a cautiously optimistic view of the sector. The slow recovery from the beginning of the year was in line with our expectation, as weak macro sentiments and outbound travel suppressed pent-up demand for autos despite China moving past Covid.”
“The long term secular growth outlook for EVs remains intact as demand has shifted from government policy-led to consumer-driven, but EV growth is set to decelerate, and growing competition and overcapacity will pose challenges for the industry in the near term. Nearer term, we expect PHEV growth to outpace the market,” they added.
According to data on first-time auto insurance registrations, China registered 564k units of EV sales (which is the second highest monthly registration figure and only behind that for December 2022) and EV penetration of 31.7%.
BYD (SZ:002594) continued to top EV sales in May with 197.5k units and 39.3% overall share, followed by Tesla (NASDAQ:TSLA) with 44.1k units and 8.8% market share. Overall EV sales (BEVs & PHEVs) were up 72.7% YoY and reached 564k units in May, partly due to soft comps last year. BEV sales grew 57.4% YoY and PHEV grew 117.8%.
Within their electric vehicle coverage, Bernstein rates Li Auto (NASDAQ:LI) Outperform, with XPeng (NYSE:XPEV) and NIO Inc. (NYSE:NIO) at Market-Perform.
Shares of NIO and XPEV are down 1.06% and 4.75% respectively in pre-market trading on Tuesday, while shares of TSLA are up 0.38%.