NIO and Other Chinese EV Stocks Had a Brutal Week. Here’s Why.

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It was a tough week for buyers in Chinese electric-vehicle makers. One analyst has an concept about what’s behind this week’s downturn.

Shares of

NIO

(ticker: NIO),

XPeng

(XPEV), and

Li Auto

(LI), fell about 5%, 10%, and 15%, respectively, this week. That efficiency stands in distinction to

Tesla

(TSLA), which gained about 9% over the identical span. The

S&P 500

and

Dow Jones Industrial Average

each rose greater than 1% this previous week.

Deutsche Bank analyst Edison Yu provided his commentary on this week’s motion in a analysis report printed on a Friday. “We believe this week’s weakness has been driven by worries about competition,” wrote Yu.

The Chinese electric-vehicle market is the world’s largest and essentially the most aggressive, “with essentially every major technology company now planning to build at least some part of the electric vehicle,” Yu famous. He named

Baidu

(BIDU), Foxconn, Huawei, and Xiamoni, amongst others moving into the Chinese electric-vehicle market. His record didn’t embody Tesla, which expanded its Chinese providing to incorporate Model Y crossover autos just lately, and

Ford Motor

(F), which began taking orders for its Mach E in China this week.

Still, Yu believes Nio, Xpeng, and Li Auto may be long-term winners. Of the three, he prefers NIO and XPeng, score each shares Buy. His value goal on NIO is $70. His value goal on XPeng is $48 a share. Yu charges Li inventory Hold and has a $32 value goal for these shares.

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All three targets are effectively above the place shares have been buying and selling this week. NIO inventory closed Friday at roughly $36 a share. XPeng and Li shares closed at about $31 and $19, respectively.

Yu’s friends largely agree. The common analyst value targets for NIO, XPeng, and Li are about $62, $51, and $39, respectively.

Overall, greater than 70% of the scores on the three shares are Buy. The average Buy-rating ratio for shares within the Dow is about 60%.

Barron’s warned investors to be cautious with the three Chinese shares in December, writing that new competitors was a downside and the shares themselves are costly. The three shares are down greater than 25% since that article was printed.

Write to Al Root at allen.root@dowjones.com