BYD, Polestar, Nio - China's cars are becoming increasingly present on our roads. In China itself, domestic carmakers have long since overtaken the likes of VW and - in the case of electric cars - Tesla. However, it is not so easy to profit from this on the stock market.
10 May 2024. FRANKFURT (Börse Frankfurt). "Progress comes from China", writes the ADAC, "Wake-up call for Mercedes, BMW and Co: China is stealing the show" according to "Auto Bild". At the recently concluded "Auto China 2024" trade fair in Beijing, over 700 manufacturers from all over the world showcased their latest models - and Europeans and Americans were amazed at what is coming from China itself.
There have long been many car companies in China that have nothing to hide behind Western brands, such as BYD, Geely, Chery, Great Wall Motors and SAIC. And while Apple has bid farewell as a car manufacturer, smartphone manufacturer Xiaomi caused a sensation with a sports sedan in the style of the Porsche Taycan. "This year, Chinese car manufacturers are once again celebrating a gigantic firework display of new products, while there are only a few highlights from a German perspective with Audi, BMW, Mini, Mercedes-Benz and VW," explained the ADAC.
BYD: Long sideways trend
China's BYD Group sold over 2.5 million vehicles on the domestic market in 2023, overtaking the VW Group, which only sold 2.3 million. And US electric car manufacturer Tesla lost its leading position on the global market for electric vehicles to BYD in the fourth quarter of 2023. BYD's advantage: the company is broadly positioned as a developer, car manufacturer and battery manufacturer. It is also researching a sodium-ion battery without lithium and cobalt, which would make e-mobility significantly cheaper. BYD is also successfully focusing on collaborations. It was recently reported that China's car manufacturer Nio has signed a contract with BYD for the supply of batteries.
The BYD share (CNE100000296), which is traded by Marc Richter from Baader Bank, has been trending somewhat weaker or sideways since its high in 2022. However, it has been rising since February. The share price is currently EUR 26.55 after EUR 22 three months ago. The US bank Morgan Stanley assumes that the shares of Chinese car manufacturers will regain their appeal in the second quarter. However, favorites are Li Auto, XPeng and Nio, while BYD is only rated "hold". The reason: Morgan Stanley expects further downward revisions to consensus estimates for BYD due to the saturated markets in China.
Tesla share price halved since high
Things are not going well at all for Tesla (US88160R1014) on the stock market at the moment. The share, which is traded by Walter Vorhauser of Oddo BHF, has fallen from 230 euros to 160 euros this year. The share is already a long way off the highs of well over EUR 300 from 2022. For the first quarter of this year, Tesla reported the first decline in sales in around four years.
There is a lot of pessimism about Tesla. Bernstein Research, DZ Bank and JP Morgan rate the shares as "underperform" or "sell", while Barclays Capital, Deutsche Bank and UBS rate them as "neutral". Only RBC Capital sees the carmaker as an "outperformer". Bernstein names a price target of only 120 US dollars (currently 178 US dollars). Although Tesla has largely performed well in view of lower expectations, it has refused to provide details on the announced introduction of new models based on existing production lines. Unlike BYD, the Americans do not yet have any successes to show in this area.
BorgWarner with a good outlook
The example of BorgWarner shows that automotive suppliers can also do things right. The US company from Auburn Hills in Michigan is one of the largest automotive suppliers in the world and is also well positioned in the field of electromobility, for example with transmissions for electric cars. BorgWarner also relies on cooperations, for example with Polestar, the joint electric and hybrid car company of Volvo Car Corporation and China's car manufacturer Geely. The BorgWarner share (US0997241064), which is traded by Baader Bank trader Richter, jumped after the publication of the latest figures. The decisive factor was that the outlook was raised significantly.
Incidentally, the latest forecasts for the German car manufacturer are not so bad: Bernstein Research, JP Morgan and Deutsche Bank, for example, recommend buying into BMW. Deutsche Bank, Jefferies, Warburg Research and RBC Capital also rate VW and Mercedes as "buy".
By Anna-Maria Borse © 10 May 2024, Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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