Nio managed to increase deliveries of its electric vehicles in August compared to July. However, rivals Li Auto and Xpeng saw a sharp drop in deliveries. Electric vehicle players continue to face supply chain disruptions for the resurgence of Covid in China as well as weaker consumer demand due to a difficult economic environment in the country.
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Shares of Chinese electric vehicle makers Nio, Li Auto and Xpeng fell on Thursday after the latter two start-ups reported a sharp drop in car shipments in August.
Here are the August delivery numbers for all three companies:
- Li-Auto: Delivery of 4,571 vehicles in August, down 56% from the number of 10,422 cars in July. This figure is also down 51% year-on-year.
- Xpeng: Delivery of 9,578 vehicles in August, down 16% from the number of 11,524 cars in July. However, this represents a 33% year-over-year increase.
- Nio: Delivery of 10,677 vehicles in August, up 6% from the number of 10,052 cars in July. This is also an 81.6% year-over-year increase.
Nio was the only company to grow on a monthly basis in August, but the EV start-up’s US-listed shares fell more than 8%. Shares of Li Auto fell around 4% while Xpeng fell more than 6%.
China’s economy faces a number of challenges, including a resurgence of Covid-19 which has seen major cities like Shanghai in lockdown. Over the past few days Shenzhen, China’s tech hub, has enacted Covid restrictions and on Thursday the mega city of Chengdu went into lockdown.
While some cities have been able to reopen, consumer sentiment remains fragile and uncertainty reigns due to China’s “zero-Covid” policy.
The second largest economy in the world is also facing a shortage of electricity which affects the charging stations of electric vehicles. Last month, Tesla and Nio suspended some of their charging services.
These issues are impacting sales of electric vehicles.
Bill Russo, CEO of Shanghai-based Automobility, told CNBC the numbers “reflect ongoing supply chain issues as well as being at the high end of the price range and with the economy weakening people are turning to affordability and that is squeezing some of the more expensive models.”
Last month, Xpeng said it expected to deliver between 29,000 and 31,000 electric vehicles in the third quarter of the year. This orientation has disappointed investors.
Xpeng Chairman Brian Gu said the guidance reflects that the industry is entering a “relatively slow season” and store traffic is less due to the Covid situation.
Yanan Shen, chairman of Li Auto, said on an earnings call last month that the Covid outbreak “severely affected” the company’s supply chains and there remained “disruptions and difficulties”.
Shen also said there has been a slowdown in order intake for its flagship Li ONE sport utility vehicle.
Li Auto began delivering its new L9 car to customers at the end of August. And the company said it plans to launch and deliver a large SUV called Li L8 in early November. This could affect sales of its Li ONE, according to Russo.
“Li launched major new products with L9 and L8, which also impact consumer demand for Li ONE. When new products come out, demand for the old model often suffers,” Russo said. .
To stimulate demand, China announced last month that it would extend its tax exemption for purchases of new energy vehicles until the end of 2023.
Competition continues to intensify in China’s electric vehicle market. Along with Li Auto’s new cars, Xpeng plans to start deliveries of its new G9 SUV in October and launch two new vehicles next year.