The electric-vehicle (EV) industry is facing a difficult start to the year, with price reductions and investor destocking affecting first-quarter results. Chinese EV makers experienced reduced order intake in January due to high inventories, leading...
The electric-vehicle (EV) industry is facing a difficult start to the year. Price reductions and investor destocking will have a negative impact on first-quarter results, which is concerning for all auto manufacturers, including Tesla.
Delivery results for January have confirmed the unfavorable situation that investors were already anticipating. Chinese EV makers Li Auto, NIO, and XPeng recently reported their January delivery numbers, and collectively, they delivered 49,470 units. This represents a significant decline of 44% compared to December 2023.
While it's true that January is typically a slower month for car sales, this 44% drop is actually greater than the 40% sequential decrease experienced a year ago when transitioning from December 2022 to January 2023.
According to a report by Citi analyst Jeff Chung, Chinese EV makers experienced reduced order intake in January due to dealers dealing with high inventories. To address this issue, EV prices have been lowered as companies strive to sell vehicles and alleviate their inventory burden.
Out of the three Chinese EV makers mentioned, Li Auto is the largest. They managed to deliver 31,165 vehicles in January, which is a 38% decline compared to the previous month but a remarkable 106% increase from the same period last year. It's worth noting that Li Auto shares experienced a 3% rise in overseas trading on Thursday. While this could surprise some investors, it should be taken into account that Li shares have already fallen by 28% since the beginning of this year.
Li U.S.-listed American depositary receipts (ADRs) experienced a 3.1% increase in premarket trading, signaling a positive start to the day. Meanwhile, S&P 500 and Nasdaq Composite futures saw more modest gains of 0.4% and 0.6% respectively.
NIO, one of the major Chinese electric vehicle (EV) manufacturers, delivered 10,055 units. Although this represents a 44% decrease compared to the previous month, it is still an 18% increase compared to the same period last year. NIO stock rose by 0.3% in overseas trading, bringing its overall decline in 2024 to around 40%. NIO’s U.S.-listed ADRs experienced a more significant rise of 3.6%.
XPeng, another prominent EV maker in China, delivered 8,250 vehicles in the same period. This marks a month-over-month decrease of 59%, but a year-over-year increase of 58%. XPeng stock saw a slight increase of 1.4% in overseas trading, bringing its year-to-date decline to approximately 42%. XPeng’s U.S.-listed ADRs showed a similar upward trend of about 2.5%.
Following the release of the delivery figures from Chinese EV manufacturers, Tesla's stock rose by approximately 2%. However, prior to this development, Tesla's shares had declined by about 25% in 2024.
Chinese car manufacturers as a whole, including Tesla's manufacturing plant in Shanghai, achieved sales of roughly 6 million all-battery electric vehicles in 2023—an increase of approximately 20% compared to the previous year. Citi's Chung remains optimistic about growth in 2024 and predicts a further increase of 16%.
If Chung's projections are accurate, battery electric vehicles (BEVs) will account for approximately 27% of total car sales in China this year—an increase from the 24% share observed in 2023.
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