The majority of EV vehicle demand in the 2020s will come out of China. Tesla is the story stock of 2020 with outrageous amateur investments from apps like Robinhood and young people who have inherited money and who have no clue.
While Tesla is extremely innovative and years ahead in certain battery type technology with a solid business model, China will simply use them in to spur on domestic innovation in the EV sector.
China uses Tesla to spur on its own EV innovation and growth
China has NIO, Xpeng, Li Auto and dozens of new EV companies that will one day rival Tesla sales within China. While a huge first comer Tesla will eventually begin to lose market share globally as these Chinese native EV makers rise to prominence.
This is how business and innovation works and China in the end will favor its own companies. This is why a Government deal saved NIO, making its stock go from $2 to $35. China will use Tesla to bolster its own companies, while giving Tesla a fair place in China to spur innovation.
Just as with Apple phones, eventually the native Chinese brands catch up. Already at the end of 2020 the writing is on the wall of how this slowly begins to occur. NIO doubled sales recently. Xpeng delivered 3,040 vehicles, up 229% from less than 1,000 vehicles a year earlier. While both are companies likely 5 years behind Tesla, Chinese markets and money will push them higher.
Nio, Xpeng and Li Auto are just a trio of companies in the sector but there are others. China will win the green tech race. BYD, BAIC, there are literally dozens of others. Really good companies, totally unknown in the West. Tesla can win because of its brand image, but all things made in America don’t shine in the future. A future where Chinese companies will rule innovation.
The Chinese consumer is king
Let’s not be naïve, the Chinese consumer is king here too. The Chinese electric vehicle space is booming, with China-based manufacturers accounting for over 50% of global EV deliveries. China is the world’s largest market for new vehicles.
Sales rose 13% year over year in September 2020.Demand for EVs in China is likely to remain robust as the Chinese government wants about 25% of all new cars sold in the country to be electric by 2025, up from roughly 5% at present. This is all but bad news for Tesla’s stock in the future. Any China bull will tell you what’s coming.
Rising deliveries are good, not only for Xpeng and NIO, but for the EV industry. Both delivery figures are more evidence that EV demand hasn’t been hurt by Covid-19. The number of electric vehicles in China, and globally, is up year over year.
China is also years ahead in green tech adoption and stimulus. It’s yet another field that America cannot win, due to poor leadership, bad business practices and an inept view of the future.
Chinese EV models compete, offer more, and cost less
Nio, which was founded in 2014, currently offers three premium electric SUVs, ES8, ES6 and EC6, which are priced starting at about $50k. The company is working on developing self-driving technology and also offers other unique innovations such as Battery as a Service (BaaS) – which allows customers to subscribe for car batteries, rather than paying for them up front.
Li Auto sells Extended-Range Electric Vehicles, which are essentially EVs that also have a small gasoline engine that can generate additional electric power for the battery. This reduces the need for EV-charging infrastructure, which is currently limited in China.
Xpeng produces and sells premium electric vehicles, including the G3 SUV and the P7 four-door sedan, which are roughly positioned as rivals to Tesla’s Model Y SUV and Model 3 sedan, although they are more affordable, with the basic version of the G3 starting at about $22,000 post subsidies.
China’s EV niche market and Tesla
Are you catching my drift? The EV niche market has begun in China, one that will disrupt the automobile industry forever. Tesla can do amazingly but it will still only own 15% of the market, and then 10% and then it will begin to lose in China.
China will engineer such an event. To imagine any other scenario for Tesla is a bit absurd. Or you’d have to believe what Elon Musk says. Elon Musk is a bit to the business world, what Trump is to politics. Someone adept at bending the truth. When your viral marketing chops begins to blur the lines with dishonesty and fraud, you have a problem.
The solution to Tesla’s hype is the Chinese innovation engine of the EV and Green tech sector. It will be one of the biggest business stories of the 2020s. The Last Futurist predicts Chinese EV makers will be some of the best stocks you could have bought when they went IPO or in early 2021.
Companies you’d want to hold for a decade. Tesla in China can be popular and can build more factories, it will only fuel innovation in China.
You don’t need to be too bright to understand how China leverages foreign brands to stimulate domestic innovation. Apple and Tesla are perfect examples. Look at what China did to the smart phone sector in the 2015 to 2020 period. The EV sector will have the same fate, but radically more dominant for China’s future of the EV and automobile sector.