Tesla rose for seven consecutive days, Li Auto exclaimed a target price of HKD 205, is the halo of electric vehicles coming back?

According to the VITON financial news app, after a period of adjustment, electric vehicle stocks have ushered in a new round of gains.

Tesla (TSLA.US) has risen for seven consecutive trading days, with a nearly 25% increase just this week. At the same time, Chinese electric vehicle stocks have also surged significantly, with Li Auto (LI.US) rising nearly 16% this week, Nio (NIO.US) up over 17%, and XPeng (XPEV.US) up nearly 14%.

The continuous rise in electric vehicle stocks raises the question: does it herald a resurgence in the electric vehicle industry?

Continuous positive news, "sound of rise" in electric vehicle stocks

After announcing second-quarter delivery data that exceeded expectations on Tuesday, Tesla's stock price soared, triggering a frenzy in the electric vehicle sector.

The data shows that Tesla delivered 443,956 vehicles in the second quarter, a 4.7% year-on-year decrease but higher than the analysts' general forecast of 436,000 vehicles. According to FactSet data, this is the first time in the past four quarters that Tesla has exceeded expectations, and the magnitude of the beat is also the largest since the fourth quarter of 2021.

The better-than-expected delivery data has also won favor from Wall Street analysts. Analysts at Bank of America raised Tesla's target price from $220 to $260, while Wedbush analysts raised the target price from $275 to $300.

In a report on Tuesday, Wedbush analysts stated that global demand for electric vehicles appears to be stabilizing after a decline in early 2024, and added that Tesla's delivery data marks a "significant turning point" after a "very turbulent start to the year."

Analysts at Bank of America also stated, "The increasing number of affordable electric vehicles being launched this year and in the future will drive up electric vehicle sales."

In addition, Tesla announced on Weibo on Wednesday evening that the second-generation humanoid robot Optimus will make an appearance at the 2024 World Artificial Intelligence Conference in Shanghai from July 4th to 7th, "witnessing the further evolution of humanoid robots." This news boosted Tesla's stock by 6.54% on Wednesday, closing at $246.39.

Tesla has now risen for seven consecutive trading days, with a nearly 25% increase just this week. As the upward trend continues, Tesla's stock price is approaching this year's high. It is understood that since the release of Q1 earnings on April 24th, Musk reiterated the importance of FSD and the acceleration of launching affordable models, leading to a strong rebound for Tesla over a period of more than two months, with a 78% increase as of the closing on July 3rd.

This week, Tesla's competitors including Rivian (RIVN.US) also announced good delivery data, indicating a recovery in the electric vehicle market.

Rivian, once dubbed the "Tesla killer," rose over 9% this week and surged 30% last week. The stock has rebounded nearly 80% from its low point this year. It was reported that at the end of June, Volkswagen announced an investment of up to $5 billion in Rivian, which stimulated Rivian to soar over 50% in after-hours tradingPartial traditional car companies' electrification transformation is beginning to show results. Ford Motor Company (F.US) has performed well in hybrid and electric vehicle sales. Data shows that Ford's car sales in the second quarter increased by 1% year-on-year to 536,050 units; electric vehicle sales increased by 61% to 23,957 units, a 72% increase this year, second only to Tesla; hybrid car sales increased by 56% to 53,822 units. Investors are becoming increasingly interested in this stock. The stock rose nearly 3% this week, with a year-to-date increase of nearly 10%.

Of note, the Chinese luxury electric vehicle market seems to be improving. In June 2024, Li Auto delivered 47,774 new vehicles, a year-on-year increase of 46.7%. As of June 30, 2024, Li Auto's cumulative delivery volume reached 822,345 units, ranking first among Chinese new energy vehicle brands. Morgan Stanley believes that after the recent sell-off of Li Auto stock, the short-term valuation is more attractive, giving Li Auto-W (02015) a "buy" rating with a target price of HKD 205, 150% higher than the current level.

Meanwhile, other Chinese electric vehicle brands have also announced strong delivery data. In June 2024, XPeng delivered a total of 10,668 new vehicles, a 24% year-on-year increase and a 5% month-on-month increase. Nio delivered a total of 21,209 new vehicles, a 98% year-on-year increase, reaching a historical high.

As of Wednesday's U.S. stock market close, Li Auto rose nearly 7%, rebounding 17% from the year's low; XPeng rose over 9%, rebounding 27% from the year's low; Nio rose nearly 8%, rebounding 35% from the year's low.

Data source: Futu Securities

Is the halo of electric vehicles shining again?

Electric vehicle stocks were once investors' darlings, attracting a lot of attention with their innovative technology and environmental concepts. However, with sluggish demand and intensified competition, electric vehicle stocks have also experienced a period of adjustment.

In the first half of 2024, Tesla plummeted by 20%, with a cumulative market value evaporating by $161.4 billion, becoming the S&P 500 index component stock with the largest market value decline. After the recent surge, Tesla is close to recovering its year-to-date decline.

In comparison, Rivian (RIVN.US) has fallen by 38% year-to-date, Lucid Group (LCID.US) by 30%, XPeng, Li Auto, and others by over 40% year-to-date. And the U.S. electric vehicle manufacturer Fisker has filed for bankruptcy protection.

Overall, despite recent delivery data being good, the road ahead for electric vehicle manufacturers remains bumpyAlthough Tesla's delivery volume in the second quarter exceeded expectations unexpectedly, the delivery volume has declined year-on-year for the second consecutive quarter. CNN reported that the year-on-year decline in Tesla's sales volume in the second quarter indicates intensified competition in the electric vehicle market. Despite the overall growth in electric vehicle sales, the industry's growth rate has been proven to be lower than expected.

Jessica Caldwell, director of market research company Edmunds, also warned that "with more frequent price cuts and incentives, Tesla's ability to attract consumer attention is diminishing."

It is worth noting that as a global leader in electric vehicles, Tesla's stock price is often seen as a barometer of the electric vehicle market. However, Tesla's stock price does not always fully reflect the overall trend of the entire electric vehicle market, as its business scope extends far beyond electric vehicles.

Tesla CEO Musk has stated that compared to clean energy business, Cybercab taxi services, and humanoid robots, its consumer car business will eventually pale in comparison.

Several Wall Street institutions also agree with this view.

Wedbush analysts stated that Tesla is more like an artificial intelligence and robotics company rather than a traditional car company, thanks to its full self-driving software, robot taxi, and artificial intelligence robot projects.

Wedbush analysts stated: "In our view, the key to Tesla's stock is that Wall Street recognizes Tesla as the most underestimated artificial intelligence company in the market. On August 8th, Musk and Tesla will usher in a historic Robotaxi Day, paving the way for the future of FSD and autonomous driving."

Morgan Stanley analyst Adam Jonas believes that as long as investors view Tesla as a car company facing increasingly fierce competition, its stock price will be at risk. However, in the long run, Jonas expects Tesla's valuation to take off like other tech giants. "For Tesla, cars are like electronic game chips for Nvidia (NVDA.US). For Tesla, cars are like selling books for Amazon (AMZN.US)."

In conclusion, while Tesla's stock rebound can to some extent reflect the market's confidence in the electric vehicle industry, investors believe that Tesla is not just a car company. Under the shadow of high interest rates, the days of other electric vehicle companies are still challenging