Which Chinese EV Stocks Could Challenge Tesla in Europe?
Consumers in Europe seem to be turning their back on Tesla; could a Chinese automaker surge ahead in the EV race?
Key Takeaways
Tesla’s sales in Europe are falling, making room for Chinese automakers to grow their market share;
Nio, XPeng and Zeekr are all targeting an expansion of their product offerings in Europe and the UK, despite increased tariffs;
The price war in the Chinese market continues to impact EV makers’ profit margins.
Consumers in Europe seem to be turning their back on Tesla [TSLA].
Elon Musk’s electric vehicle (EV) maker sold less than 10,000 vehicles across Europe in January, a sharp 45% drop from a year earlier, when it shifted approximately 18,000 vehicles, according to data from the European Automobile Manufacturers’ Association.[1] Its share of the market halved from 1.8% to 1%.
It was overtaken by SAIC Motor [600104:SS], whose sales of combustion engine vehicles, hybrids and EVs jumped 37% to approximately 23,000 in the first month of the year. The Chinese automaker’s market share rose from 1.7% to 2.3%.
If Tesla continues to see sales slide, then this could be an opening for Chinese challengers to gain some ground. The likes of Nio [NIO], XPeng [XPEV] and Zeekr [ZK] are on a European offensive as they look for growth beyond the highly competitive EV market at home, in the hope that it can accelerate them towards profitability.
Nio Targets UK Launch
Reports emerged towards the end of 2024 that Nio is planning to introduce its sub-brand Onvo to the UK this year. It was speculated that the UK was chosen as the EV maker’s first European market because it has not slapped import tariffs on China-built EVs.[2]
The company will certainly bring its budget-friendly Firefly brand to Europe, including the UK, in the first half of the year. It will look to get around any tariffs by selling through local partners, unlike the Nio brand, which relies on a direct sales model.[3],[4]
XPeng Aims to Double Its International Markets
XPeng roared into the UK market in February with the launch of the 6G SUV, which is priced £6,000 lower than Tesla’s Model Y. It follows recent launches in France, Germany and Italy.
President Brian Gu is targeting expansion to 60 international markets by the end of 2025, doubling its current presence. “Our ambition is to be the number one Chinese premium EV brand overseas,” declared Gu at the launch event in London, as reported by Business Insider.[5]
Zeekr Ready to Launch Model Y Competitor
Zeekr is set to launch the model it hopes will compete with Tesla’s Model Y, the 7X, in Europe in Q2. Orders are already being taken in the Netherlands, Norway and Sweden, and the first deliveries will be made in the summer.
“The Zeekr 7X will play a key role in our mission to accelerate the shift to sustainable mobility in Europe,” said Lothar Schupet, the company’s Chief Commercial Officer for Europe, in the press release.[6]
Chinese EV Stocks Are Mixed
The Nio share price is down 26.82% over the past 12 months and down 2.98% since the start of the year. The XPeng share price has posted gains of 103.52% and 71.32% over the respective periods. The Zeekr share price has declined 11.25% since its IPO in May 2024 and 11.63% in the year to date.
Here’s how their fundamentals compare.
It can be difficult to value companies that are not yet profitable. Nonetheless, all three stocks have a P/S ratio that is far lower than Tesla’s 10.49.
NIO Stock, XPEV Stock and ZK Stock: The Investment Case
The Investment Case for Nio
The Bull Case
CEO William Li said in December that Nio is aiming to achieve monthly deliveries of 20,000 units from its Onvo brand by March. Nio is also aiming to double sales across the board this year, according to Reuters.[7]
Despite achieving a growth rate of 30–40% over the past few years, Li told reporters at an event in Shanghai that this is not good enough. The company is tightening its control in a bid to accelerate sales and margin growth and should provide investors with an update when it reports Q4 earnings on March 4.
The Bear Case
The EV maker’s success is going to depend on how it fares in cutting costs and improving margins. If the EV price war in China rages on this year then it could lead to a sales slowdown, impacting management’s target of achieving profitability in 2026.[8]
The Investment Case for XPeng
The Bull Case
The company is hoping to become the first of China’s pure-play EV makers to turn profitable, most likely towards the end of this year. It is pinning its hopes on international expansion and robust demand for new models in the new markets it enters.[9]
Speaking to Reuters in November, Gu said that he is confident the company is in a strong position to achieve its target.
The Bear Case
The road to profitability could hit a few bumps this year. Having come through the China price war relatively unscathed, EV makers in the country could go under this year as prices come down and competition intensifies.
“The period from 2025 to 2027 marks the elimination round in the automotive industry,” XPeng CEO He Xiaopeng wrote in an email to employees seen by the Wall Street Journal last month.[10] The company needs to be efficient if it is to avoid being eliminated from the EV race.
The Investment Case for Zeekr
The Bull Case
On February 14, Zeekr announced the completion of a restructuring that has seen it take control of sister brand Lynk and Co. Both are owned by Geely Holdings [GELYF].
The newly combined group is targeting a 40% growth rate this year, selling 710,000 vehicles, wrote Zeekr CEO Andy An in an internal letter last week seen by CnEV Post.[11] The aim over the next two years is to become the world’s leading premium-luxury new energy vehicle group and shift 1 million units annually.
The Bear Case
The first monthly delivery figure for the combined group was released on March 1.[12] It suggests that achieving the 40% growth rate in 2025 may not be straightforward.
The group delivered 31,277 vehicles last month, up 50.96% year-over-year, though down 25.56% from January. Sequential growth in the Zeekr brand of 17.56% was offset by a 42.69% decline in the Lynk and Co brand.
Conclusion
Tesla’s slumping sales in Europe could open the door for Chinese EV makers to take a share of the continent’s EV market. Nio, Xpeng and Zeekr are all ramping up European expansion; all three have yet to break even.
This is for informational purposes only. OPTO Markets does not recommend any specific securities or investment strategies. Investing involves risk and investments may lose value, including the loss of principal. Past performance does not guarantee future results.
[1] https://www.acea.auto/files/Press_release_car_registrations_January_2025.pdf
[2] https://eletric-vehicles.com/nio/onvo/exclusive-nio-denies-report-on-uk-as-entry-market-for-onvo-brand/
[3] https://www.reuters.com/business/autos-transportation/chinas-nio-launch-firefly-ev-europe-2025-2024-12-22/
[4] https://cnevpost.com/2024/12/22/nio-to-launch-firefly-1st-model-europe-h1-2025/
[5] https://www.businessinsider.com/byd-xpeng-china-ev-crushing-tesla-going-global-2025-2
[6] https://www.zeekrlife.com/global/posts/introducing-the-all-electric-zeekr-7x-in-europe-the-suv-that-intuitively-adapts-t
[7] https://www.reuters.com/business/autos-transportation/chinas-nio-aims-monthly-deliveries-20000-onvo-cars-next-march-2024-12-12/
[8] https://www.fool.com/earnings/call-transcripts/2024/11/20/nio-nio-q3-2024-earnings-call-transcript/#:~:text=Vehicle%20margin%20was%2013.1%25%20in,of%20changes%20in%20product%20mix.
[9]https://www.reuters.com/business/autos-transportation/chinese-ev-maker-xpeng-break-even-later-2025-president-says-2024-11-20/
[10] https://www.wsj.com/business/autos/china-auto-industry-outlook-2025-1afec5a0
[11]https://cnevpost.com/2025/02/14/zeekr-closes-deal-to-integrate-lynk-co/
[12] https://cnevpost.com/2025/03/01/zeekr-group-deliveries-feb-2025/