Demand for electric vehicles in China is faltering. That’s what he could do
Lee said deliveries last month were 4,571 compared with 9,433 a year earlier. XPeng delivered 9,578 cars in August, compared to 11,524 in July and 7,214 vehicles in August 2021. NIO delivered 10,677 vehicles in August, up from 10,052 delivered in July and 7,102 in August 2021.
Combined, the three automakers delivered 24,826 vehicles in August. This is the second consecutive monthly decline and the worst figure since April 2022, when Covid lockdowns affected results.
American shares its depositary
Li Auto
fell 2% in premarket trading Thursday. XPeng fell 2.2% and NIO stock closed down 2.6%.
S&P 500
and
Dow Jones Industrial Average
Futures fell 0.8% and 0.6%, respectively.
Tesla
Stock (TSLA) may also be affected by Chinese delivery figures. China is the largest market for new EVs in the world and
Tesla
generates about a quarter of its sales in the country.
Preliminary estimates from the China Automobile Association showed that Tesla produced about 77,000 vehicles in China in August. That’s a good month and would be the second-highest month since the company’s Shanghai plant. This preliminary figure also includes exports. The breakdown between domestic sales and export sales will be available later in the month.
Tesla stock fell about 1.8% in premarket trading.
Li Auto and XPeng have already reported Q2 numbers and received Q3 delivery guidance. It’s easy to see what the August deliveries mean for September. NIO reports its second quarter numbers on September 7.
XPeng expects to deliver about 30,000 vehicles in the third quarter, up from 34,422 delivered in the second quarter. XPeng delivered 11,524 in July. Including the August number, XPeng needs to deliver about 8,900 vehicles in September to meet the guidelines. This, of course, would be lower than August’s number.
Li Auto expects to deliver about 28,000 vehicles in the third quarter, up from 28,687 delivered in the second quarter. Li delivered 10,422 vehicles in July. Including August’s number, Lee needs to make about 13,000 vehicles in September. If Lee manages this, it would effectively be a record for monthly deliveries.
Lower third-quarter deliveries compared to the second quarter were blamed by management teams on seasonality – July and August are slow months – and lingering demand issues from Covid lockdowns.
This increases the importance of the numbers from the coming months. Citigroup analyst Jeff Chung recently wrote that he believes September sales need to show sequential improvement for stocks to perform at the end of the year.
Li’s guidance indicates that demand will improve. The XPeng guidance does not. The conflict will keep investors nervous in the coming weeks.
Heading into Thursday’s trading, NIO shares have fallen about 38% this year. Shares of Li and XPeng are down about 10% and 63%, respectively. The S&P 500 and
Nasdaq Composite
fell 17% and 24%, respectively.
Rising interest rates have taken some of the steam out of growth stocks like these three. Rising tensions between US and Chinese officials haven’t helped either.
Write to Al Root at allen.root@dowjones.com
