Mohit Oberoi
Chinese EV (electric vehicle) stocks including Li Auto (NYSE: LI), NIO (NYSE: NIO), and Xpeng Motors (NYSE: XPEV) have whipsawed this year. There has been a divergence in their performance though and XPEV’s deliveries have lagged behind that of peers.
Yesterday, Li Auto released its earnings for the third quarter of 2022. The company’s losses widened to $237.5 million in the quarter even as sales increased 20.2% YoY in the quarter. It delivered 26,524 cars in the third quarter which was 5.2% higher than the corresponding quarter in the last year.
The rise in deliveries came amid a global macro slowdown and supply chain woes. Chinese EV makers faced an additional headwind from the intermittent lockdowns.
Li Auto delivered 15,034 cars in November which was a new monthly record for the company. Its cumulative deliveries reached 236,101 at the end of November.
NIO’s deliveries also rose 29.3% YoY in the third quarter of 2022 and totaled 31,607. NIO delivered 14,178 cars in November which is a new record for the company. The company’s cumulative deliveries reached 273,741 at the end of November.
NIO stock has crashed this year amid the sell-off in Chinese EV stocks. However, last month, Deutsche Bank said that the worst looks over for the company and reiterated its bullish call on the company. There is a guide on how beginners can buy NIO stock.
However, it’s a different story altogether when we look at Xpeng Motors.
Xpeng Motors’ Deliveries Have Tanked
Xpeng Motors delivered 29,750 cars in the third quarter of 2022 which was 15% higher than the corresponding quarter last year. However, the company’s production and deliveries have plummeted after peaking in June.
In June, Xpeng Motors delivered 15,295 cars, a near record for the Chinese EV company. However, in October, its deliveries fell to a mere 5,101 cars which were half of what it did in the same month in 2021.
The slump continued in November and Xpeng Motors delivered only 5,811 vehicles in the month. To put that in perspective it delivered 15,613 cars in the same month last year. In the first 11 months of 2022, Xpeng Motors delivered 109,645 cars.
Its cumulative deliveries now stand at 247,418. Earlier this year, XPEV looked set to surpass NIO in terms of deliveries. However, after subpar performance over the last few months, the gap had only widened between the two.
During November, it delivered 1,546 G9 SUVs which it said came “against a challenging operating backdrop which affected G9’s production ramp-up and delivery services in certain area.”
Xpeng Motors’ Deliveries Might be Soft in December as Well
While releasing the Q3 2022 earnings, Xpeng Motors forecasted deliveries of between 20,000-21,000 cars in the fourth quarter, which is roughly half of what it did in the fourth quarter of 2021.
Looking at the October and November deliveries, the company aims to deliver between 9,088-10,088 cars in December.
In contrast, Li Auto forecast deliveries between 45,000-48,000 in the fourth quarter, which at the top end of the guidance would mean a 36.3% YoY rise. The guidance implies deliveries of 22,914 cars in December as the company has delivered 25,086 cars so far in the fourth quarter.
NIO too provided a strong sales forecast for the fourth quarter of 2022. It expects to deliver between 43,000-48,000 cars in the fourth quarter and forecasted revenues between $2.4-$2.7 billion for the quarter.
NIO Expects Record Deliveries in December
NIO delivered a total of 24,237 cars in October and November so the guidance implies deliveries of upto 23,763 cars in December, which would be yet another record for the Chinese EV company.
While providing the guidance, NIO said, “This business outlook reflects the Company’s current and preliminary view on the business situation and market condition, which is subject to change.”
Notably, the operating environment has been quite fluid in China where NIO, Xpeng Motors, and Li Auto produce all their cars.
That said, while the new models from Li Auto and NIO have received a warm reception, Xpeng Motors’ new models have not really charmed buyers.
Analysts Turned Bearish on Xpeng Motors Stock
Analysts have turned cautious about Xpeng Motors stock. Citi double-downgraded the stock from a buy to a sell. Jefferies also downgraded Xpeng Motors stock to underperform and lowered its target price to a mere $4.2. In their note, Jefferies analysts led by Johnson Wan said, that the “honeymoon stage” for EVs is coming to an end in China.
They added, that XPEV “faces tough competition with existing models reaching the end of their life cycles and a weak product pipeline that will likely continue to drag sales into 2023. They warned that the recently launched G9 SUV wasn’t received well in China and blamed Xpeng Motors’ “missteps in product and pricing strategy” for market share losses.
Tesla Stock Also Crashed in 2022
Meanwhile, Tesla has also lost market share in the US even as its deliveries have risen. The stock has lost over $500 billion in market cap this year. The drama over Elon Musk’s Twitter acquisition has made even some Tesla bulls apprehensive.
Morgan Stanley analyst Adam Jonas however continues to remain bullish on TSLA stock and believes that there would be a good buying opportunity near his bear case target price of $150. We have a guide on how to buy Tesla stock.
As for Xpeng Motors, its December deliveries might also trail that of NIO and Li Auto. The stock has meanwhile risen sharply over the last month despite dismal deliveries and missing third-quarter earnings estimates.
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This article was written for Business 2 Community by Mohit Oberoi.
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