Over the past year in the capital markets, investors have enthusiastically chased 'new upstarts' while avoiding 'old established players' as if the latter were already washed up in the industrial tide.

However, when viewed within the same industrial framework, the decision to invest in 'old established players' or 'new upstarts' varies depending on the stage of industry development. The NEV sector serves as a prime example.

During the high-growth phase marked by rapid penetration of new energy, 'Wei, Xiao, Li' were defined by the market as automotive tech stocks due to their purer new energy positioning and higher sales growth, maintaining a price-to-sales (PS) ratio above 2x for nearly five years.

Today, however, 'Wei, Xiao, Li' are reverting to manufacturing valuations typical of mature automotive industries. Their current valuations have fallen to between 0.8x and 1.2x PS, roughly in line with BYD.

The disappearance of valuation premiums for 'new upstarts' stems not only from the industry's shift away from high-growth narratives but also from 'Wei, Xiao, Li' losing ground in competition. Traditional automakers ('old established players') have achieved higher growth rates than 'Wei, Xiao, Li' based on larger NEV sales volumes.

This competitive dynamic stems from the automotive industry's characteristics. It is an industry of incremental technological improvements where single-point innovations rarely disrupt the existing landscape. This allows 'old established players' ample time to catch up even if they initially lag in new technologies.

The incremental nature of automotive technology also means slower product iteration and limited differentiation. Once leading automakers reach a 'good enough' technological stage, product premiums become difficult to sustain. Consequently, competition shifts from innovation speed in the early stages to systemic operational capabilities later on—a strength of mature 'old established players.'

These changes dictate that betting on 'new upstarts' for explosive growth makes sense during industry infancy, but 'old established players' offer higher certainty in the mid-to-late stages.

/ 01 / New upstarts' valuations align with old established players

In high-growth industries, capital favors high-growth narratives and prioritizes growth potential and speed.

Thus, during the early NEV era, 'Wei, Xiao, Li' enjoyed higher valuation premiums than traditional automakers due to their purer new energy positioning and rapid sales growth. To investors back then, BYD and Geely were classified as traditional manufacturing cyclical stocks, while 'Wei, Xiao, Li' were seen as automotive tech growth stocks.

Valuation multiples reflect this directly. During the industry's high-growth phase of rapid penetration, PE valuations for new upstarts became ineffective due to losses and volatile profits, so the market relied on PS ratios to gauge growth potential. Both NIO and XPeng maintained average PS ratios above 4x for nearly five years.

Today, however, 'Wei, Xiao, Li' are reverting to cyclical valuations typical of mature automotive industries. Their current PS ratios fall between 0.8x and 1.2x, aligning with BYD's valuation logic—a pattern seen in traditional automakers riding product cycle waves.

The disappearance of valuation premiums relates to the end of high-growth narratives and 'Wei, Xiao, Li' losing competitive ground to 'old established players.'

The NEV industry has reached an inflection point, bidding farewell to rapid growth and entering a mature phase of stable sales. From January to June 2026, total NEV sales grew just 7.3% YoY, a sharp decline from 28.2% in 2025. Leading players' capacity data confirms this trend.

Over the past 11 months, BYD saw capacity contraction in 10 months. Historically, the NEV industry operated below manufacturing's average capacity utilization to pursue scale and market share. Now, capacity contraction by leaders signals the end of high growth, prompting capital markets to focus more on competitive dynamics and corporate profits.

Competitively, new upstarts are clearly losing ground.

In H1 this year, BYD's NEV sales were three times the combined total of 'Wei, Xiao, Li,' while Geely alone outsold them. Critically, 'old established players' achieved higher growth rates despite larger scales: Geely's NEV sales grew 10% YoY, while Li Auto and XPeng saw declines of 5.1% and 15.8%, respectively.

Profit-wise, BYD and Geely maintain stable margins, but new upstarts face bleak prospects. Li Auto, previously profitable, has returned to losses.

The key to their future capital market performance hinges on whether the fundamental gap between new upstarts and 'old established players' continues to widen.

/ 02 / In homogeneous industries, old established players have greater advantages

If the few-year NEV cycle isn't enough to judge the fate of new upstarts and 'old established players,' the century-long evolution of the automotive industry proves the latter's higher likelihood of success.

Since 1903, the automotive industry has undergone transformations like assembly line production and electrification, akin to today's NEV rise. After these shifts, the U.S. auto industry shrank from 2,000 players to just three survivors—General Motors, Ford, and Chrysler—two of which were among the earliest 'old established players.'

In automotive, 'old established players' consistently outperform 'new upstarts' due to the industry's characteristics. It is an industry of incremental technological improvements where single-point innovations rarely disrupt the existing landscape, giving 'old established players' time to catch up even if they initially lag in new technologies.

Geely exemplifies this. It entered the NEV race 3–5 years later than 'Xiao and Li' but now outsells them combined. The core reason: core EV components can be outsourced, and vehicle platform architectures, while innovative, are not insurmountable.

The incremental nature of automotive technology also means slow product iteration and limited differentiation. Once leading automakers reach a 'good enough' technological stage, product premiums become difficult to sustain. This shaped past NEV competition:

Building larger vehicles and selling them cheaper became the only option. Today, BYD's 140,000-yuan Han sedan competes on space with former 200,000–300,000-yuan C-class sedans; Li Auto's SUV 'replaces' Mercedes-Benz GLS at half the price, only to be further 'replaced' by Leapmotor at half Li Auto's price.

Ultimately, scale determines success in automotive price competition. In hardware-heavy, slow-iteration industries like automotive, success hinges on platform reuse and cost-sharing.

'Old established players,' with broader price band coverage and larger user bases, can derive multiple models from a single platform, amortizing R&D costs across brands and drastically reducing per-unit costs through high volumes. This cost advantage lets them expand scale and lower costs further via price wars. BYD even saw a phase where 'more price wars led to higher profit margins.'

With clear scale advantages, future NEV winners will likely be 'old established players' like BYD and Geely.

/ 03 / Focus on new upstarts in infancy, old established players in maturity

Before NEVs, smartphones and TVs saw 'old established players' defeat 'new upstarts.'

Both products emerged in the 20th century and underwent major functional upgrades with internet and smart features—traditional phones to smartphones, traditional TVs to smart TVs.

During these transitions, new upstarts like LeEco, Whaley, Storm TV, 360, and Smartisan emerged. But in the mid-to-late stages, only Xiaomi survived among newcomers, while Huawei, OV, and Hisense ('old established players') dominated.

Across industries, 'new upstarts' succeeding is rare; 'old established players' winning is common. This is because competitive factors vary by industry stage.

Early stages prioritize innovation speed, but later stages demand systemic operational capabilities—a strength built over decades by 'old established players' in manufacturing, supply chains, product portfolios, and cost control.

Early in the NEV era, 'Wei, Xiao, Li' (new upstarts) leveraged agile organizations and rapid decision-making to lead in intelligence and niche innovations: Li Auto created the family extended-range SUV segment, XPeng pioneered urban NOA, and NIO built a premium user service system, securing orders and high valuation premiums.

But as the industry matures, innovation becomes commoditized, and operational capabilities determine success. New upstarts have yet to prove themselves here, bearing both strategic trial-and-error costs and long-term pains from weak management.

For example, XPeng now relies heavily on the Mona product line, raising concerns about its pipeline, while NIO, though out of critical condition, faces worries that R&D cuts may hurt future model competitiveness. Li Auto still needs a BEV model to prove itself.

This doesn't mean all 'new upstarts' will fail in maturity, but 'old established players' clearly have higher odds and certainty based on industry evolution patterns.