Benzinga
The upcoming catalyst that could move Chinese EV stocks Nio, Xpeng, Li Auto
Chinese shares of electric vehicles have declined somewhat in recent sessions. An upcoming catalyst could pull stocks out of this lackluster phase: January delivery numbers expected next week. Finding the Right Place in the Chinese EV Market: China is a hot EV market, both from the addressable market opportunity and supply perspective. “China is a greenfield EV market opportunity for many well-positioned car players as we believe total EV sales in the region could potentially double in the coming years given pent-up demand for EV vehicles from customers across all price points,” said Wedbush analyst Daniel Ives said in a note. Goldman Sachs analyst Fei Feng estimates that EV penetration, including battery electric and plug-in hybrid vehicles, will increase from 5% in 2020 to 20% in 2025, 53% in 2035 and 80% in 2050. Xu Haidong, the deputy chief engineer of China Association of Automobile Manufacturers, said at a summit late last year that electric vehicle sales in China could reach 1.8 million units by 2021 – 40% more than a year earlier – thanks to stable economic growth, sustained stimulus measures for vehicle consumption and sales promotion by manufacturers. Still, the supply side is packed with homegrown startups, international pure-play EV company Tesla Inc (NASDAQ: TSLA), and traditional automakers all vying for a piece of cake. Top companies in China include Nio Inc – ADR (NYSE: NIO), Xpeng Inc – ADR (NYSE: XPEV), Li Auto Inc. (NASDAQ: LI) and WM Motors, supported by both Baidu Inc (NASDAQ: BIDU) and technology conglomerate Tencent Holdings ADR (OTC: TCEHY). Edison Yu, Deutsche Bank Securities analyst, said the companies collectively are the “Fab Four” of the Chinese EV market. Nio On Record Streak: Nio, which has an excellent position in the Chinese EV market, has been reporting record delivery figures lately. After the COVID-19 pandemic impacted sales in the first two months of 2020, the company has credibly cleared itself through a series of innovative measures and technological improvements. The company ended 2020 at a peak, with a record 43,728 vehicles for the year. It has been generating record numbers per month since August 2020. In December, Nio delivered a record 7,007 vehicles, comprising 2,009 ES8s, 2,493 ES6s and 2,505 of the company’s newly launched EC6s. Deliveries are at a not-so-robust pace of 1,598 in January 2020. Given that Nio announced it would make up for the cut in government subsidies for vehicles purchased until January 10 and a limited period with no down payment, the pace of sales would make up . will likely have accelerated further. Nio’s battery-as-a-service program is already starting to have a positive impact on sales. Related Link: Nio Analyst Sees Meaningful Tailwind for EV Brand Sales Volume Xpeng Makes All the Right Sounds: Xpeng, which listed its ADSs on NYSE at the end of August, has also joined the party. “XPeng is well positioned to capture market share in the mid-range and lower premium markets by delivering a technology-oriented ‘smart’ experience by pushing the boundaries of its ADAS features and cockpit user interface functionality, especially in speech recognition,” said Deutsche Bank. Yu said in a note. Xpeng – which sells the G3, an EV SUV, and the P7, an all-electric sedan – is expected to launch a new sedan with lidar technology this year. Earlier this week, the company launched a major over-the-air upgrade for its P7 sedan customers in China, with a new version of XPeng’s operating system, Xmart OS 2.5.0. In December, Xpeng delivered a record 5,700 vehicles, up 326% year-on-year and up 35% year-on-month. For the year, the company delivered a total of 27,041 vehicles, an increase of 112% year-on-year. Li Auto’s Robust Performance: Li Auto also delivered excellent December performance, with deliveries of 6,126 Li ONEs in December and 14,464 units for 2020. Monthly performance represented increases of 31.9% month-on-month and 529.6% year-on-year. on-year. China EV Equity Performance: Nio shares soared to record highs of $ 66.99 on Jan. 11, in response to the Nio Day event on Jan. 9. Since then, the stock has retreated. Xpeng, meanwhile, peaked at $ 74.49 on Dec. 24 before withdrawing. After moving roughly sideways thereafter, the stock has made a comeback in recent sessions. Li Auto is witnessing a meager patch after it hit a record high of $ 47.70, also on Dec. 24. Next week’s delivery numbers and upcoming fourth quarter results could be the key to determining which way stocks are heading. Photo courtesy of Nio. See more from Benzinga Click Here for Benzinga Options Trading Breaking Novavax’s Coronavirus Vaccination Data: 2 Analysts Take Johnson & Johnson’s COVID-19 Vaccine Data: What You Need to Know Benzinga does not provide investment advice. All rights reserved.