If 2024 was the year when traditional foreign automakers faced the exit from the Chinese auto market, 2025 appears to be the year when a few local electric car companies can consolidate their leadership. “It's in China [new energy vehicle] Leaders like BYD are likely to further consolidate their market position, while foreign brands fade away,” Nomura said in a global auto outlook for 2025 published on December 4. October this year – up from 12% in 2023. That's according to year-to-date sales figures. The Hong Kong-traded automaker is Nomura's top pick for the Chinese auto market Analysts rate BYD as a buy, with a price target of 375 Hong Kong dollars ($48.20), for an upside of just over 3% from Friday's close The Chinese automaker produced more cars in 2023 than Elon Musk's automaker for the second year in a row. Tesla still made more battery-only cars than BYD, whose hybrid vehicles account for at least half of total production. But the American electric car company sells at a much higher price range than most BYD models. Tesla sales in China fell 4.3% in November from a year ago, while BYD saw a 67% increase, according to CNBC China Passenger calculations. Data from the car association. BYD is so far ahead of its competitors that the second largest player by market share in China, Geely, has just 8%, according to Nomura. HSBC analysts raised their price target for Hong Kong-traded Geely Automobile to HKD 19.30 in late November, almost 31% higher than where the stock closed on Friday. The company rates the stock as Buy. “We believe the company is on track to exceed its full-year target of 2 million units, with EV penetration likely to reach 40%, supported by the strong performance of newly launched models,” the HSBC said analysts. They expect Geely to grow sales by 22% to 2.6 million units next year. Geely owns US-listed electric car company Zeekr and other car brands including Swedish brand Volvo, which the Chinese company acquired from Ford in 2010. Other traditional automakers, domestic and foreign, have struggled in China as the world's largest auto market has rapidly shifted to battery-only and hybrid cars. General Motors announced last week that it expects to incur billions of dollars in costs as it restructures its joint venture with SAIC Motor Corp. in China. The changes include plans to close factories. SAIC GM Wuling, a local GM joint venture, had 3% of the Chinese car market as of October this year, according to Nomura. The data showed that the company held 6% of the new energy vehicle segment. Chinese electric car startups still represent only a fraction of the domestic market compared to top players BYD and Geely. Among Citi analysts' buying strategies is Hong Kong-listed Yongda, which operates stores for several new energy vehicle brands in China, including Huawei's Aito. Although the Chinese smartphone and telecommunications giant has emphasized that it does not make cars, Huawei is working with traditional automakers to sell only battery-powered and hybrid vehicles, including the in-car entertainment system, driver assistance technology and other software. Citi analysts said that according to discussions with Yongda management on December 4, cars with Huawei's car system could reach sales of 1 million units next year, above internally forecast sales of 700,000 units. Yongda expects the total number of Huawei-authorized stores to exceed 20 by early next year, up from 8 currently, according to Citi. The company has a price target of HKD 2.98 on Yongda, an increase of almost 47% from Friday's closing price. Yongda also operates electric car stores for Xiaomi and Xpeng, according to Citi. Among publicly traded Chinese electric car startups, Citi analysts have buy ratings on Nio and Leapmotor, but not on Xpeng or Li Auto, both of which are rated neutral. Citi said in a report in late November that Hong Kong-listed Leapmotor spends on research and development more efficiently than its peers, at around 7,400 yuan ($1,017) per car. In contrast, Xpeng spends 25,900 yuan, Nio 26,900 yuan and Li Auto 21,000 yuan, Citi said. The analysts raised their price target for Leapmotor from HKD 44.20 to HKD 45.10, almost 62% above Friday's closing price. Citi expects Nio's U.S.-traded shares could nearly double from current levels to $8.90. In a meeting with Nio on December 3, Citi said the company aims to reach group-level breakeven by 2026, in part by limiting growth in research and development spending to less than 10% per year and by reducing vehicle deliveries enlarge. The company aims to increase sales of its premium Nio brand by 10% to 20% next year, and accelerate sales of its recently launched lower-priced Onvo brand to 20,000 per month by March, the Citi report said. After launching two new SUVs in the second half of next year, the automaker expects Onvo's monthly sales to reach 30,000 to 50,000 vehicles, Citi said.
