China to put the brakes on Tesla

Tesla’s seemingly unstoppable growth in both sales and share price could be about to run into a great big wall in China – the world’s biggest car market – but it won’t be because of a brand you’ve heard of, like Great Wall.

No, the big players in China are going to be brands that mean a lot in that market, but have little penetration in the western world, much like WeChat.

We’ve told you before about Nio, which is the leading EV company in China and has seen its stock price soar by 581 percent this year, hitting a valuation of US$37.5 billion. If you’ve got a secret Chinese bank account, now might be a good time to invest.

Nio sold 42,000 EVs in 2019 and is gaming for 110,000 in 2020 – about one quarter of Tesla’s global annual sales – yet they’re going to make that number in one market alone.

While Nio is an emerging giant in China, another company called Xpeng, or XPEV, is also threatening to boom. Launched in late August this year it raised a market cap of US$1.5 billion and it has the capacity to produce more than 250,000 vehicles a year, having opened a giant factory this year. That’s even more than Nio can manage. 

Its first vehicle is the P7, which has been favourably compared to the Tesla Model 3.

There is another, older Chinese EV company you might not have heard of, Li, which also raised over US$1 billion from its IPO, which was held in July. 

Li is a PHEV maker, which aims its vehicles at rural parts of China were the charging infrastructure is not yet common, but there are plenty of petrol stations.

The potential for further growth in China is more than just potential, it’s legislated, with the Chinese government pledging to make 25 percent of its car sales EVs by 2025 in a bid to reduce its truly appalling air pollution.