Investors think Tesla is overvalued: analysts like NIO better and will accelerate 67%

NIO more attractive than Tesla

The war between the United States and China transcends far beyond the purely political. Electric car manufacturers Tesla and NIO have been in the battle for months to dominate the sector. Although at the moment it seems difficult to unseat the brand of tycoon Elon Musk, in 2020 it sold about half a million cars compared to the 43,728 of the Asian brand, according to data from Bloomberg.

When choosing between buying an electric car of one brand or another, many factors must be taken into account, the same happens on the stock market, where the situation turns around and Nio advances ahead of Tesla. The Asian brand has dropped just over 23% so far this year compared to the 7% rise in the North American brand in the same period, and it is precisely these data that the market likes the most.

The consensus of analysts that follows them at Bloomberg believes that in the coming months NIO will experience increases in the stock market of more than 67%, to reach 62.21 dollars per share, currently trading close to 37 dollars. However, Tesla’s valuations are below its current price, so experts believe that it will go the opposite way. The median price target is 10% lower at $680, down from $756 today.

With these figures on the table, the market is clear, it is the right time to buy NIO shares, while with Tesla it is better to keep the ones you already have in your portfolio but not enter. This is reflected in the consensus of FactSet analysts.

NIO vs Tesla in Markets

However, it must be borne in mind that Tesla, at least it is a bag, is bought cheaper than NIO despite the latter’s falls. The United States trades at 55 times its estimated EBITDA (gross operating profit) for 2022, while Nio does it at 373 times. You have to leave until 2022 because that will be when NIO begins to obtain positive results, according to estimates ( see graph ). If all goes according to plan, it will close in 2021 with a negative EBITDA of 364 million dollars, compared to the hole of 444 million in 2020. Tesla, however, will obtain an EBITDA of 4.767 million in 2021, 90% more than in 2020.

Even Elon Musk seems to fall for NIO, so much so that last Friday he described Chinese electric cars as “the most competitive in the world.” “Chinese consumers want a car with smarter and better-connected features, so we see great growth potential for fully self-driving and connected vehicles in China,” said the Tesla CEO. “I have great respect for the many Chinese automakers who are pushing these technologies,” he acknowledged.

The rest of the sector

Nio, with a market capitalization of $60.78 billion, is the best-known Chinese manufacturer, but it is not the only one. Musk does very well to praise his Asian competitors because at least on the stock market they are hot on his heels. The other two companies with a very important role in this electric car race are Xpeng and Li Auto, with capitalizations of 32,170 million and 29,350 million, respectively.

The first, after giving up 12% so far this year, has a potential of more than 47%, so much so that 90% of the analysts who follow it on the stock market recommend buying its securities. With regard to Li Auto, it is trading at the same levels at which January began, although it has risen by nearly 70% from the lows of the year. If the estimates do not fail, you still have hikes ahead of 40%. The investment bank consensus recommendation is also to buy. Both have one thing in common, no analyst advises to sell their titles.