5 Best Chinese EV Stocks (Invest in China’s Electric Cars)

China is the largest market for electric cars, and if you want to invest in EVs, consider Chinese EV makers. Here are 5 China EV stocks to get you started.

SustainFi   Updated January 12th, 2022

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Why invest in Chinese EV stocks?

EV sales are 20% of the China car market, and growth is expected to continue

China is the largest EV market in the world. According to the China Passenger Car Association, China’s 2021 new energy vehicle (NEV) sales were up 169% year-on-year to a record of 2.99 million units, or 14.8% of new car sales. (NEVs include hybrids and fuel cell-powered cars besides electric cars.) China’s NEV sales were over 20% of the market in November and December 2021.

Growth is expected to continue. According to UBS, a Swiss bank, NEVs will account for 3 out of 5 new cars sold in China by 2030. In the meantime, the Chinese government has called for a 20% sales target for NEVs by 2025. Given that NEVs were almost 15% of all car sales in China in 2021, 20% doesn’t look so ambitious anymore.

China subsidizes electric cars. NEV subsidies have been reduced for several years now and will end by 2023, but that may not matter. Chinese NEV buyers have many models to choose from, and demand appears to be genuine, not subsidy-driven.

Local manufacturers dominate the China EV market

NEV sales in China are driven by home-grown brands like NIO, Xpeng, BYD, and Li Auto, though Tesla is big in the premium segment and has a 7% market share overall. Local NEV car makers reported record 2021 deliveries; NIO, Xpeng, and Li Auto made over 90,000 deliveries each during the year.

There is an extensive EV charging infrastructure

In the U.S., EV adoption is set back by the lack of EV charging stations, especially outside California. But China already has a robust infrastructure, with over 1 million charging locations, according to China Electric Vehicle Charging Infrastructure Promotion Alliance. In addition, battery-swapping stations are a welcome innovation because they reduce the time it takes to charge a car.

China controls the EV supply chain

Chinese players like Ganfeng Lithium dominate the processing of critical “green metals” like lithium and cobalt. Chinese companies have also invested in cobalt mines in the Democratic Republic of Congo, the home to 60-70% of the world’s cobalt supply.

And China is home to battery manufacturers like Contemporary Amperex Technology (CATL), the world’s top EV battery maker.

China could export EVs to Europe and the U.S.

Although so far China NEVs have mostly satisfied domestic demand, NEV makers like NIO, BYD, and Xpeng are starting to export to Europe, beginning with Norway, where EV penetration is particularly high. Perhaps the U.S. could follow, too.

Should you be concerned about delisting?

In December 2021, DiDi Global, a Beijing-based ride hailing company, decided to delist from the New York Stock Exchange a few months after its IPO. Pushed by Chinese regulators, the company will list in Hong Kong instead.

Some investors are worried about buying Chinese stocks like NIO, Li Auto, and Xpeng that are listed in the U.S. due to delisting concerns. Some of these companies are already listed in Hong Kong. However, though any delisting would create volatility, investors should be able to exchange U.S.-listed shares for Hong Kong shares in the worst-case scenario.

What are the Chinese EV stocks (you can buy in the U.S.)?

Chinese EV stock list

  • NIO (NIO)
  • Xpeng (XPEV)
  • Li Auto (Li)
  • BYD (BYDDF)
  • NIU Technologies (NIU)

Tesla is not on the list. Although Tesla has a Shanghai plant and sells to Chinese buyers, the United States continues to be its biggest market. It is unclear if the foreign company backlash in China will impact Tesla, whose market share in China is already declining.

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Read more about each company:

1. NIO (NIO)

  • Market capitalization: $46 billion
  • 1-year return: -50%

“The Tesla of China,” NIO is the pioneer in the premium EV market. It was founded in 2014 and backed by Tencent Holdings. Although NIO is based in Shanghai, the company has an American depositary receipt (ADR) listed on the New York Stock Exchange, making it easy for U.S. investors to access.

NIO delivered 91,429 vehicles in 2021, including 10,489 in December alone, a nearly 50% annual increase.

Despite being known for SUVs, NIO has just launched the ET5, a mid-size electric sedan, which is expected to challenge Tesla’s best-selling Model 3. Deliveries are expected in September 2022, and ET5 has already become NIO’s most pre-ordered vehicle. But, unlike Tesla, NIO doesn’t make its own cars, partnering with JAC, a state-owned car manufacturer.

In November 2021, NIO agreed to partner with Shell to install 100 battery swapping stations in China by 2025. Battery swapping stations allow EV drivers to get a fresh battery without waiting for their battery to charge. Long charging times have been a major barrier to EV adoption.

The company is also expanding into Europe, starting with Norway, the country with the highest EV penetration in the world. NIO drivers will be able to use Shell’s charging network in Europe as part of the partnership.

Still, NIO’s valuation is high, which is one of the reasons the stock struggled in 2021.

2. Xpeng (XPEV)

  • Market capitalization: $40 billion
  • 1-year return: -12%

Alibaba-backed Xpeng is a Chinese EV maker with an ADR listed in the U.S., making it easy to invest.

Founded in 2015, the company produces a smart electric SUV (the G3) and a sedan (the P7), targeting the mid to high-end passenger car market. Like Tesla, Xpeng has pitched its smart features, such as autonomous driving and voice assistants. Launched in late 2021, Xpeng’s P5, a smart family sedan, is the first mass production car with LiDAR technology, allowing for better recognition of obstacles on the road, even under adverse weather conditions.

In 2021, Xpeng delivered 98,155 EVs, a 263% increase year-over-year. The car-maker has also unveiled a new SUV, the G9, which it plans to launch in China in the third quarter of 2022. Besides, Xpeng is planning to expand its European presence in 2022, having started with Norway.

3. Li Auto (LI)

  • Market capitalization: $30 billion
  • 1-year return: -16%

Nasdaq-listed Li Auto is the largest electric SUV maker in China, focused on the mid to high-end market. Li Auto’s first model, Li ONE, is a six-seat large premium electric SUV released in May 2021.

The company delivered 90,491 vehicles in 2021, including more than 14,000 in December, a 130% increase. Going forward, Li Auto plans to extend its product line with new types of vehicles, expanding its addressable market.

Li Auto was founded in 2015 and backed by TikTok owner Bytedance and the e-commerce group Meituan Dianping.

4. BYD (BYDDF)

  • Market capitalization: $97 billion
  • 1-year return: -2%

Warren Buffet-backed BYD is more than an EV manufacturer. Founded in 1995 in Shenzhen, China, BYD began as a rechargeable battery maker for mobile phones. Today, it’s also a major EV battery supplier. Besides electric cars, BYD makes battery-powered buses, trucks, forklifts, and a monorail system.

In 2021, the company shipped 603,783 passenger and commercial vehicles, including EVs. (BYD also makes gasoline-powered vehicles.) The company is also selling EVs in Norway and plans to expand to other European and global markets.

The stock trades over-the-counter (OTC) in the U.S.

5. NIU Technologies (NIU)

  • Market capitalization: $1.2 billion
  • 1-year return: -61%

NIU Technologies makes smart electric scooters and motorcycles, capitalizing on the micro-mobility trend. The company, which was founded in 2014, has an ADR listed on Nasdaq, making it easy to invest.

In Q4 2021, NIU sold a whopping 238,188 units, growing 58% year-over-year. For the full year, NIU sold over 1 million units, growing 72.5%. Although China remains NIU’s largest market, the company is rapidly expanding internationally.

NIU sells scooters using its retail network, which is growing fast. They added 422 new stores in the fourth quarter alone, for a total of 3,108 stores in China at the end of 2021.

Not only that, but NIU doubled its manufacturing capacity in 2021 from 1 million to 2 million units.

🔔 Looking to invest in micromobility? Here are more electric motorcycle and bike stocks.

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Is there a China EV ETF?

If you don’t want to bet on individual stocks, there is a Hong Kong-listed China EV ETF. The Global X China Electric Vehicle and Battery ETF invests in companies with exposure to the electric vehicle theme in China. The fund launched in 2020 and has almost $1 billion in assets under management. However, not all brokers allow buying Hong Kong-listed stocks or ETFs. There are several other Chinese EV ETFs listed in mainland China, which makes them difficult for U.S. investors to access.

You can also invest in U.S.-listed EV ETFs, many of which buy Chinese stocks. For example, the KraneShares Electric Vehicles & Future Mobility ETF (KARS) has one-third of its assets invested in Chinese stocks.

🔔 Check out this list of the top EV ETFs.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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Frequently Asked Questions

What Chinese EV stocks can be bought in the US?

Chinese EV stocks you can buy in the U.S. include NIO (NIO), Xpeng (XPEV), Li Auto (Li), BYD (BYDDF), and NIU (NIU).

What is the biggest EV company in China?

BYD is the biggest EV company in China, with over $90 billion in market cap.

Is NIO a Chinese stock?

NIO is a Chinese stock. The company is headquartered in Shanghai, China, and sells mostly to the Chinese market.