💰New Alpha| Shake It Off: Is Tesla still invincible?

US Stocks open higher but close lower; yet $Tesla Motors(TSLA)$ drops over 6%, sparking market concerns.

Three pillars of success in China auto market: BYD’s Scale, Huawei’s Technology, Xiaomi’s Marketing.

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| Market recap

On January 3rd, all three major US stock indexes closed slightly lower. However, AI-related stocks remained resilient, with $NVIDIA(NVDA)$ rising around 3% and $Meta Platforms, Inc.(META)$ gaining over 2%. The $NASDAQ Golden Dragon China Index(HXC)$ fell by 1.5%.

- Megacaps: $Tesla Motors(TSLA)$ dropped more than 6%, marking its fifth consecutive daily decline and reaching a new closing low since December 6th, 2024. Tesla’s forecast for 2024 full-year vehicle sales is 1.79 million, a 1.1% decrease from 2023, marking the first annual decline in sales in the past decade.

- Dive deeper: Tesla's potential trouble: Outside of China, both the European and North American markets saw declines. In China, however, Tesla had a strong performance last year, with annual sales reaching approximately 657,000 units, up 8.8% year-over-year. Q4 saw a new high with deliveries of 196,900 units, accounting for 40% of global deliveries. This growth was primarily driven by frequent price cuts, promotional activities, and China government incentives.

- Movers: Among Chinese stocks, $KINGSOFT CLOUD(03896)$ caught attention, rising more than 2%. Benefiting from $XIAOMI-W(01810)$’s huge future demand for cloud services, public cloud service revenues are expected to grow rapidly. This positive news also drove $KINGSOFT CLOUD(03896)$ to rise over 5% in the Hong Kong market, with intraday gains reaching nearly 14%.

| Three pillars of success in China Auto Market

The Chinese automotive market is protected by three impenetrable "moats": BYD’s scale advantage, Huawei’s smart technology, and Xiaomi’s marketing expertise.

In 2024, China’s EV sales are expected to surpass 10 million units for the first time. Both mainstream and luxury brands have made significant breakthroughs and are beginning to expand globally.

$BYD Co., Ltd.(BYDDY)$ $Byd Company Limited(002594)$ $BYD COMPANY(01211)$ , the market leader, is expected to achieve 4.272 million passenger vehicle sales in 2024, a year-over-year growth of 41.23%. Of these, 417,200 units are expected to be sold overseas, a remarkable increase of 71.9%, accounting for nearly 10% of total sales. According to a production and sales report from $Seres Group Co.,Ltd.(601127)$ , the company’s EV sales in 2024 are forecast to reach 426,900 units, a 182.84% year-over-year growth. AITO, the luxury brand jointly developed by Seres and Huawei, continues to gain market sensation. The AITO M9 is expected to deliver a total of 150,000 units for the year, while the AITO M7 is expected to deliver 200,000 units.

| The Long Way to the Top

On January 3rd, Xiaomi Group’s stock reached a new high, with its market capitalization surpassing HK$900 billion.

$KINGSOFT CLOUD(03896)$

With Xiaomi planning to deeply integrate AI into its ecosystem and its massive demand for computing power, Kingsoft Cloud, as a partner, is set to experience significant business growth.

$XIAOMI-W(01810)$

Xiaomi’s automotive business is expected to exceed delivery targets for 2024, with a high-growth delivery goal of 300,000 units for 2025. Additionally, Xiaomi's smartphone business remains strong, and the company is actively expanding into the AI sector, attracting continued investor interest.

$BLACK SESAME(02533)$ Intelligence

Black Sesame Intelligence has reached a deepened strategic cooperation agreement with $Alibaba(BABA)$ Cloud and $Zebra(ZBRA)$ Auto, the automotive tech unicorn under Alibaba Group. Black Sesame Intelligence is known for its self-developed high-performance automotive-grade chips and autonomous driving solutions. It has established partnerships with major China automakers such as FAW, $DONGFENG GROUP(00489)$ , $GEELY AUTO(00175)$ and Hongqi.

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