Wei Lai year: from the edge of bankruptcy to the top of bubble

 Wei Lai year: from the edge of bankruptcy to the top of bubble

Since this year, driven by the soaring share price of Tesla, the market value of new energy vehicle manufacturers listed in the United States has expanded rapidly. The market value of Weilai automobile has surpassed that of BMW and Daimler, approaching 73.6 billion US dollars. The market value of Xiaopeng automobile has also surpassed that of Baidu, reaching 46 billion US dollars. But Teslas market value has reached $550 billion, an order of magnitude difference.

Statistics show that from January to October this year, the market share of four Chinese brand electric vehicles of Weilai, ideality, Xiaopeng and Weima in China is constantly rising. In September and October of this year, the sum of sales exceeded Tesla. In October, the total sales volume of the four Chinese brands reached 14790, and the sales volume of Tesla in China was 12143.

Public information shows that Weilai Autos investors are Tencent, Baidu and Jingdong; Xiaopeng Autos investors are Alibaba and Xiaomi; and the investors of ideal automobile are meituan and byte beat.

Although Chinas electric vehicle market is growing rapidly and its market size is expected to surpass that of the United States, there are divergences in the market over the irrational rise of Chinas new car making forces. Bearers believe that the market value of Chinas emerging electric vehicle companies deviates from their commercial reality.

This is not to say that there is no bubble in these enterprises, but a huge bubble problem. Stock prices cant reflect the commercial nature of enterprises. The rapid rise in valuations of these enterprises is just a use of the hype of public sentiment, an auto technology company executive told the first finance and economics reporter

The above-mentioned people believe that Teslas share price rise this year has saved Weilai automobile. Weilaidu was on the verge of bankruptcy, and Teslas share price saved them. He said to the first financial reporter, but these enterprises are not Tesla, although they are similar to Tesla, but opening the cars shell, from a technical point of view, the difference between cars is not at a level, so the bubble is very big.

But he also admits that from a consumers point of view, its hard for them to identify technology. Thats why Chinas emerging electric vehicle companies can quickly compete with Tesla for market share in China.

Market size may not support valuation

Citron research, a US short seller, had short the company ahead of the companys earnings report and triggered a sell-off. Xiangchuan believes that the companys business will never be able to support the $62 billion valuation at that time.

However, the stock price of Weilai automobile quickly rose back, which means that the market is still wrestling with the bulls and bears of Chinas emerging car manufacturing forces. Bank of America, Deutsche Bank and J.P. Morgan have all raised their target share prices. Bank of America predicts that Weilai will start to make profits in 2023, one year earlier than previously expected.

According to wade bush, only about 4.5% of Chinas passenger cars are electric vehicles, which is expected to reach 10% by 2027. Analysts believe the Chinese market is big enough for companies in the industry to grow, but whether they can achieve their own valuations is another matter.

From the perspective of market sales rate, the current valuation of Weilai, Xiaopeng and ideal automobile is not cheap, and the market sales rate has reached more than ten times, even higher than Tesla.

At the same time, boosted by price reduction and other factors, Teslas sales in China are also growing rapidly, and will occupy 40% of Chinas electric vehicle market. Tesla announced last week that it will invest RMB42 million to produce super charging piles in China to further expand sales of electric vehicles.

Mr Ives said Tesla has gained scale advantage from its Shanghai Super factory, which has started producing model 3 electric vehicles at the end of 2019 and will start production of SUV model model y next year. This has helped Tesla to maintain its position as a leader in the domestic electric vehicle market, helping to maintain its presence in the Chinese market. In a report, Ives wrote.

In addition, analysts believe that Teslas real advantage lies in intellectual property. Recently, musk publicly accused Xiaopeng of plagiarism on social media. There is no doubt that these domestic manufacturers are imitating Tesla, but many things can not be learned by imitation. It requires a lot of expertise in software and semiconductors, a senior autopilot told the first finance reporter