Chinese EV sales rise in seasonally strong November Nio ( NIO ) is poised for a sharp rebound as supply winds ease and new models rise. XPeng ( XPEV ) shares rose sharply on Wednesday on a broad rally for Chinese EV stocks after a better supply forecast than in Q4. More signs emerged on Tuesday of changes to China’s ultra-tough Covid policy weighing on carmakers.
On December 1, Nio, XPeng and their Chinese EV startup counterpart Lee Auto (LI) is set to report November sales. Chinese EV giant BYD (BYDDF) should follow in a few days.
All these EV manufacturers are increasingly competing Tesla (TSLA) in the world’s largest EV market.
According to China Passenger Vehicle Association estimates, retail NEV sales are expected to reach 600,000 in November. That would be up 58.5% from a year ago, and about 8% from October. Unlike BYD, all of the startups saw their October sales decline compared to September.
“New energy vehicles,” or NEVs, include all-electric, hybrid-electric, and fuel-cell vehicles.
“Historically, auto sales in China have grown strongly at the end of the year,” Deutsche Bank analyst Edison Yu wrote in a Nov. 25 note. It expects new models including the Nio ET5 and Li L8 and L9 to boost November sales.
The country’s EV subsidies are set to expire at the end of the year, which could drive some demand.
Chinese EV stocks rose on Tuesday and rose again on Wednesday. After protests against the policy erupted in several cities over the weekend, local authorities continued to relax some “zero Covid” rules on Wednesday. China’s top leadership is also trying to take a more “targeted and precise” approach to fighting the coronavirus, local media say.
Check back Thursday for November’s results. Nio delivered 10,059 electric vehicles in October, down 7.5% from September but up 174% from a year earlier.
Investors will be looking especially at November’s ET5 numbers. Lockouts and supply issues held back October volumes for the new Tesla Model 3 rival sedan.
Deutsche Bank’s Yu predicts Nio will ship a record 13,500 EVs in November, up 34% from October and 19,500 EVs in December.
Nio itself led to record Q4 shipments on Nov. 10, while posting a worse-than-expected Q3 loss.
It expects to deliver 43,000-48,000 EVs in the fourth quarter, up 72%-92% from a year ago. That would be a 36%-52% increase compared to third quarter EV shipments of 31,607.
These deliveries include a small but growing number of European sales. Nio has expanded its deliveries from Norway to several European countries.
Nio shares rose 17.3% to 12.31 in trading today, breaking above its 50-day line for the day. Shares of Nio and its Chinese EV peers remain below the 200-day line after last year’s decline.
Check back later for November results. XPeng sold 5,101 EVs in October, down nearly 40% from September, continuing its rapid month-over-month deterioration.
Earlier Wednesday, XPeng reported a wider-than-expected third-quarter loss of 39 cents per ADR share. Revenue rose 19.3% to RMB 6.82 billion, or $959.2 million.
It sees 20,000-21,000 EV deliveries in the fourth quarter, down about 50-52% from a year ago and significantly down from 3Q’s 29,570. October shipments and November sales are similar, implying XPeng shipments will rise to around 10,000 in December.
Deutsche Bank’s Yu predicted that XPeng would ship 19,500 EVs in the fourth quarter. According to him, new models such as the G9 SUV are being developed slowly, and some old models are being phased out.
Shares of XPeng rose more than 36% to break above the 50-day line at 10.01 on Wednesday. Shares rose 6.5% to 7.34 on Tuesday.
On Wednesday, the southern Chinese city of Guangzhou, where XPeng is located, eased Covid-19 restrictions in various regions. Other major Chinese cities, including Shanghai and Zhengzhou, home to the world’s largest iPhone factory, also said they were lifting their Covid lockdowns on Wednesday.
Lee Car Sales
Check back later for November results. Li Auto sold 10,052 vehicles in October, down 13% from September and up 31% from a year ago.
Li Auto is experiencing slight delivery delays for some new L8 and L9 models due to parts shortages in November, according to local media reports. But weekly registration data shows Li Auto will easily surpass 10,000 deliveries.
Li began deliveries of the L9 SUV on August 30 and L8 on November 10. It has phased out the original One model.
On December 9, Li Auto will report its Q3 earnings before the market opens. At that time, it is also expected to provide a delivery estimate for the 4th quarter.
Shares of Lee Auto rose 16% to 21.53 on Wednesday, breaking above a long-term 50-day line. Shares rose 8.7% to 18.53 on Tuesday.
Check back later for November results. In October, BYD sold 103,157 all-electric EVs, up 150% from a year ago. It sold 217,816 fully electric and hybrid electric vehicles in October.
BYD plans to sell about one million fully electric cars in 2022.
Exports remain a small part of total sales, but are growing rapidly. The Warren Buffett-backed EV maker continues a major international expansion. On Tuesday, BYD said it will enter the private EV market in Mexico next year.
On December 9, BYD is set to launch the Frigate, a hybrid SUV. This will be added to a number of new EV releases. Tesla Model 3 rival BYD Seal went on sale at the end of August.
BYDDF shares rose 7.7% to 50.21, breaking above the 50-day line for the first time since early August. Shares rose 5.2% on Tuesday. BYD trades over the counter in the US
Tesla isn’t just releasing China sales, but weekly registration data suggests a strong month for domestic Chinese sales. A late October price cut and various other incentives, along with Tesla’s big production increase and soon-to-expire Chinese EV subsidies, are likely contributing factors.
Tesla shares rose 1.1% on the day. Shares traded below major averages on Tuesday, down 1.1%.
China Home Sales
Despite the headwinds, China’s electric car market remained red-hot in the first 10 months of 2022.
According to the China Association of Automobile Manufacturers, NEV sales rose 110% during that period, while the broader passenger car market grew just 14%. In October alone, China’s all-electric sales rose 70% to 508,000.
“Over the past 10 months, the (NEV) segment has recorded seven months of triple-digit growth on a year-on-year basis, supported by strong underlying demand and tax incentives offered by the government,” Deutsche Bank analysts said in November. 25 notes.
YOU MIGHT ALSO LIKE:
Tesla Stock Vs. BYD shares
These are the 5 best stocks to buy and watch right now
Stocks to Watch: Top Valued IPOs, Large Caps and Growth Stocks
Find the Latest Stocks Hitting Buy Zones with MarketSmith
Why This IBD Tool Makes Finding the Best Stocks Simple
Futures: Market Rally Awaits Powell Speech; What to do