SINGAPORE — Chinese language electrical car firms comparable to Nio, Xpeng and Li Auto are robust firms, however their shares are prone to see a correction, the chief govt of an auto consulting agency instructed CNBC this week.

That is as a result of their shares have shot up in current months, stated Michael Dunne, CEO at ZoZo Go, which advises automakers on doing enterprise in Asia. He stated the inventory motion “does resemble a bubble,” however the firms have the potential to develop into the “Tesla of China.”

“There’s advantage. They’re robust firms constructed by tech billionaires not in contrast to [Tesla CEO] Elon Musk,” he instructed CNBC’s “Squawk Box Asia” on Wednesday.

“There’s good cause to be investing in these shares, however watch out,” he warned. “The inventory run-ups have been sensational within the final three months.”

On Wednesday, Nio shares listed on the New York Inventory Trade closed at $62.15, hovering greater than 1,500% from a yr in the past. The inventory is up about 187% over the previous three months, whereas NYSE-listed Xpeng surged 163% and Nasdaq-listed Li Auto gained 83% in the identical interval.

“There’s certain to be a correction. These are younger firms,” Dunne stated.

Li Auto and Xpeng went public in July and August, respectively, whereas Nio’s preliminary public providing was in 2018. And the businesses nonetheless fall far wanting market chief Tesla when it comes to market capitalization and vehicle deliveries.

Dunne stated the Chinese language automakers need to deal with the home market.

“To essentially thrive, these firms — Xpeng, Nio, Li Auto and others — need to succeed at residence first,” he stated.

They will not be welcomed within the U.S. attributable to political causes, and the Europeans will likely be “very robust on the Chinese language, simply as they have been on the Japanese and Koreans earlier than them,” he added.

“So search for the Chinese language to pay attention their efforts on their residence market which is, in any case, the most important on the planet, and has all types of potential on the excessive finish and the low finish,” he stated.