Behind the momentum in China market is a 'very great EV story,' analyst says

So we don’t cover equity research, but we can quickly comment on a company. I think the whole EV sector or the momentum in China at the moment is a very great EV story because if you look at the top line growth with 100 new models in the pipeline and this company is gaining quite a lot of market share as well as the operating profit is turning around. So on the equity side, this is a good story, but if we look at the credit side, the margin is also not very good for the whole industry. Competition, as you said, it’s very intense. And the EV makers these days are not just competing on prices, but they’re also competing on software, battery charging, charging capacities as well as a lot of AI integration. So for the sector, competition is going to be still intensifying and the profit is going to take very long time to enter into a sustainable profitable stage. So I think overall it’s probably a great equity story and a shorter, but over the medium to long term, we are a bit concerned on the credit fundamental front. OK, what about the concerns over geopolitics? Because we are hearing reports about President Biden and the potential for tariffs to be imposed on Chinese EV and other strategic industries. Give us your take. We’re not so concerned in terms of the tariffs from the US or additional sanctions because Chinese EV makers, they don’t have much exposure to us already. Currently there is almost 25% tariff on Chinese auto sector. Some of the automakers was imported into the US from Mexico, but that supply chain is a little bit hard to trace. So I would say the additional impact wouldn’t be very big, but let’s say if the US decides to. Have additional tariffs on the automobile parts or the different components of the whole global EV supply chain. Than the implication could be pretty big on the EV makers or component manufacturers in other countries. But I think the other thing to pay attention to is the sanctions or the additional tariffs from the European regulators. Recently there has been talks about the UK and Europe are doing an investigation of the government subsidies and the exporting of overcapacity into Europe. Right now, the Chinese auto industry, they do still have a lot of exports into the Europe. And this is one of the growth driver for the sector last year, so this is something would be interesting to watch out for.