By Sam Boughedda
Investing.com — Barclays analyst Jiong Shao started coverage of Nio Inc (NYSE:NIO), Xpeng Inc (NYSE:XPEV), and Li Auto Inc (NASDAQ:LI) with overweight ratings on Tuesday, telling investors in a note that the companies have an "opportunity to not only take a sizable market share of the domestic auto market" but also "build a dominant position on the world stage."
Shao pointed to China's electric vehicle market for his rating, explaining that it is the largest globally, with about a 25 to 30% global share of units sold per annum.
"It is a national priority for China to develop cutting-edge EV and autonomous driving technologies, and to export competitive EVs around the world, as Chinese smartphone manufacturers have done in recent years. Several leading EV makers have already started selling their products in Europe,” Shao stated.
Speaking on each company individually, the analyst said that concerns regarding NIO's growth "should be somewhat alleviated now" as the company is set to double production capacity at its current factory in March. Shao has a $34 price target on NIO shares which are up 2.38% to $24.56 Tuesday.
Shao has a $38 price target on Li Auto, whose shares are up 0.7% Tuesday. However, he questioned the company's current one-model strategy, saying he doesn't think it will work, and pointed to Apple (NASDAQ:AAPL) as an example of an outlier in the realm.
"Apple is an outlier in that it can more or less maintain its one-model strategy (we don’t count different colors or memory sizes as different models), while most companies including Ford and TLSA cannot stick to that strategy for very long," stated Shao. "Apple is a closed system and thus has the luxury to “tell” consumers what they want or need. Most products fit in an open system marketplace.”
Concluding his note with comments on XPeng, Shao explained that the company's hybrid approach to store ownership — having some self-owned stores and some third-party dealers — is "sensible given XPEV’s market positioning.”
The analyst put a $45 price target on XPeng shares, which declined 0.2% Tuesday.