China’s electric and hybrid car market now accounts for 40% of total car sales, a significant contrast to the mere 7.2% in the United States. Analysts expect the U.S. market to only reach 12.5% penetration in the next two years. This is partly due to Ford and GM scaling back their electric car plans and new Treasury rules that make many U.S. electric vehicles ineligible for federal tax credits. In China, the government is actively supporting the electric car industry, with the market expected to grow and become more competitive. HSBC China autos analysts predict that over 100 new electric vehicle models will launch in the coming year. They recommend investing in BYD and Li Auto, as both companies have shown strong sales and profitability. Li Auto, in particular, has seen impressive growth in delivering over 40,000 cars a month. The company’s stock price has seen fluctuations, but analysts are optimistic about its sustained growth. HSBC also sees potential in other Chinese automakers like Changan Auto, which has recently announced a joint venture with Huawei, a leader in smart car technology. While these companies’ electric car brands are seeing sales growth, HSBC has not changed its hold rating and 18.50 yuan price target for Changan Auto. The continued growth of the electric car industry in China makes it a preferred sector for investment in the coming year.
