How Do These 2 Top EV Stocks Stack Up Against Each Other?
Electric Vehicle (EV) stocks were some of the hottest investment trends in the stock market in 2020. Everyone wanted a piece of the red-hot EV industry. From traditional automakers to new EV start-ups, all are scrambling in a race to capture more market shares as the industry heats up. We saw today that Tesla (NASDAQ: TSLA) reported its first-quarter deliveries of 184,800 vehicles, beating analysts’ expectations.
It is no secret that the world is heading towards EVs as the world moves forward toward a more sustainable environment. If you have been following the news, you would know that Volkswagen (OTCMKTS: VWAGY) recently joked about changing its name to “Voltswagen”. While not everyone appreciates the humor, it nevertheless suggests that electric vehicles are on top of the minds of many. What’s more, the International Energy Agency (IEA) announced earlier this year that it will outline the roadmap to net-zero-emissions by 2050. EVs will play a critical role in ensuring we get there.
The recent global chip shortage has had a significant impact on EV stocks. For this reason, top EV stocks have been under pressure along with the broader market weakness. Despite the shortages of chips, both Nio (NYSE: NIO) and Xpeng (NYSE: XPEV) have taken the market by storm with their robust first quarter. Now, as both companies have reported big gains in first-quarter deliveries, there has been a sigh of relief among investors. Let’s take another look to see which of the two EV stocks is the better buy in the stock market today.
Nio is an electric-vehicle maker that has seen huge success both in China and the stock market. The company is arguably one of the most successful EV companies in terms of growth today.
To elaborate, NIO stock has been up by over 1,000% in the past year. The strategic approach to its battery services could explain the underlying reason for its growth surge. Nio offers substantial discounts of up to $11,000 when customers subscribe to its battery pack usage.
Nio’s strength is at its post-purchase service. Most importantly, EV owners can conveniently replace or upgrade batteries with ease. Let’s examine how Nio has fared thus far.
Nio Is Gaining Strong Momentum In China
From its quarterly update, Nio said that it delivered 20,060 vehicles in the first quarter. That’s ahead of the roughly 19,500 it had forecast when it announced a temporary production halt last week.
Source: TD Ameritrade TOS
Despite that, Nio was able to deliver 7,257 vehicles in March, beating its monthly record of 7,225 deliveries set in January. Should the momentum persist, investors won’t have to wait long for Nio’s next delivery milestone.
New Cars, New Markets And Higher Production Capacity
As Nio gains a foothold in China, it is also worth mentioning that Nio is expanding its reach to the European market. The company plans to attract customers by offering a custom-tailored design that resonates with the local market. From there, it expects to achieve a production capacity of 300,000 by the end of 2021. The capacity expansion is in tandem with the company’s plan to commence production of the ET5 and ET7 this year. With so many developments underway, would you consider NIO stock at its current price level?
Xpeng Inc. is a leading smart EV company that designs, manufactures, and markets smart EVs that are integrated with advanced AI and autonomous driving technologies.
The company recently announced that it was able to raise $78 million in a new round of investment from the Guangdong provincial government. The funding is meant to support both Xpeng’s EV production and R&D for its autonomous driving unit.
Xpeng also recently completed its autonomous driving expedition. Utilizing a fleet of Xpeng’s P7 lineup, it is set to become the longest autonomous driving expedition in China. The expedition will cross a total distance of 3,675km across six provinces.
Record Breaking Sales
From its first-quarter deliveries, Xpeng has delivered a record-breaking 13,340 Smart EVs. This represents a 487% growth year over year. That demonstrated Xpeng’s robust growth momentum despite the seasonal industry-wide slowdown in car sales. Deliveries in March were 5,102 vehicles represents a 384% increase year over year and a 130% increase from the previous month. XPeng attributed the record to its growing brand recognition, product appeal, and expanded product portfolio.
Source: TD Ameritrade TOS
Furthermore, the company has also been relentless in broadening sales, marketing, and supercharging service networks across China. If Xpeng can keep its momentum up, the company could easily hit another record later this year.
Diversified Product Line Ups
The company also launched a lithium iron phosphate (LFP) battery option across all of its models. Unlike the nickel counterparts, LFP batteries are economical, have a longer lifespan, and reduce the risk of overheating. Investors love Xpeng and XPEV stock because it has expanded its product portfolio and is able to meet the needs of autonomous driving features at a similar price point. This could be a strong appeal to many consumers and potentially lead to a rise in demand. Considering its diversified product offerings, it seems to me like there’s a huge growth runway down the road for the company.
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Based on the profile of both Chinese EV giants, they are not exactly direct competitors. Nio has a strong position point with its comprehensive battery service. It is also planning expansions to other markets and has 3 new EVs in the pipeline with an aggressive increase in production capacity.
On the flip side, Xpeng takes the lead on being a Smart EV company with advanced autonomous driving tech and innovative batteries on addressing more market needs. Both companies appear to be on track with their developments and deliveries. It’s worth pointing out that the Chinese EV market is one of the largest globally. Thus, there are likely to be multiple winners. The question is, could both NIO stock and XPEV stock become multi-baggers in the long run?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.