Damo: Electric vehicle companies are expected to continue to face challenges in the next 10 years to cut their ideal car (02015) target price by about 20%

The Zhitong Finance App learned that Morgan Stanley published a report stating that electric vehicle companies may continue to face challenges in the next 10 years, and car companies must innovate themselves to seize the opportunities brought by artificial intelligence (AI). The bank also adjusted the target prices for a number of auto stocks. Among them, Great Wall Motor (02333) raised its target price by 23% to HK$15; Ideal Auto (02015) was drastically reduced by about 20%.

Damo said that according to the latest quarterly report of Chinese auto stocks, electric vehicle companies may continue to face challenges in the next 10 years. In this second phase, car companies must innovate themselves in order to seize the opportunities brought by AI and expand globally.

The report mentioned that with the early cancellation of local subsidies, demand for car purchases will be curtailed. Car companies are generally cautious about this season. Of the car stocks covered by the bank, the market is expected to decline in about half.

Damo expects wholesale sales of 29.9 million cars this year, up 9% year on year; next year it will be 28.5 million units, down 6%. If exports are excluded, local sales will drop 7% next year.

The bank adjusted the target prices for a number of automobile stocks. Among them, the target price of Changqi was raised from HK$12.2 to HK$15, in line with the market; the target price of Geely Auto (00175) was raised from HK$24 to HK$25, increasing the rating; the ideal car rating was increased, and the target price was lowered from HK$124 to HK$100.

The report mentioned that during the transformation of the automotive industry, the bank was more optimistic about companies that have made substantial progress in non-automotive fields such as AI, robotics, and humanoid robot technology, including Xiaopeng Motors (09868), Hesai, and Agile Technology (00425).