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Chinese electric vehicle makers plunge over 10% amid sell-off

Chinese electric vehicle (EV) makers appear to be exiting their hypergrowth phase, with Nio, XPeng and Li Auto all experiencing sharp sell-offs this week.

  • NIO Limited (NYSE: NIO) share price is down 16.6% since Monday (01 March), despite record deliveries in Q4 2020
  • Meanwhile, China’s second largest EV maker XPeng Inc (NYSE: XPEV) lost over 15% of its market cap as a result of slower February 2021 deliveries
  • Finally, Li Auto Inc (NASDAQ: LI) also declined roughly 12% in this latest tech and growth stock correction
  • Trade Nio, Xpeng and Li Auto share, long or short, with an IG account

Chinese EV makers Nio, XPeng and Li Auto all saw their stock prices plunge by over 10% this week, as investors sought to reassess their portfolios, following a series of underwhelming financial and delivery updates from each company.

Nio: ↓16.6%

Nio shares have fallen 16.6% since the company reported its Q4 and full year 2020 results on Monday (01 March 2021).

Nio’s correction was the steepest among the Chinese EV trio.

The company said that fourth quarter vehicle deliveries totalled more than 17,350 units, which is more than double Q4 2019’s delivery volume. This also represented an increase of more than 5,000 vehicles from the preceding quarter (Q3 2020).

Total deliveries for 2020 thus came in at nearly 44,000 units, up 113% year-on-year.

As a result, sales for the fourth quarter alone skyrocketed 130%, with full-year revenues up a massive 133%.

Despite that, investors were let down by other numbers, including a net loss attributable to ordinary shareholders of nearly US$229 million. Although this was a decline from the same period a year ago, it did increase 25.6% from the preceding quarter.

Furthermore, total deliveries of around 12,800 vehicles in the first two months of 2021 could also imply a potential slowdown in sequential growth rates, casting doubts over the stock’s valuation.

Shares closed an additional 4% lower on Wednesday (03 March) at US$41.53 each.

Xpeng: ↓15.4%

Rival Xpeng’s market capitalisation was also eroded by over 15% this week, after the company reported its delivery numbers for February 2021.

The automaker delivered a total of 2,223 Smart EVs in February 2021, consisting of 1,409 P7s, its smart sports sedan, and 814 G3s, its smart compact SUV. This was down from the record numbers achieved in January 2021, which saw more than 6,000 vehicles delivered.

The company said in a press release, that the lower February deliveries ‘reflect the anticipated seasonal decline in deliveries due to the slowdown in the week-long Chinese New Year holiday’.

However, Nio went on to assure investors that sales have since rebounded, and that it is ‘witnessing robust customer demand as sales and delivery activities resumed after the holiday’.

Nevertheless, vehicle deliveries in January and February 2021 combined represented a 577% increase year-over-year.

Xpeng shares closed 4.67% lower on Wednesday at US$30.03 each.

Li Auto: ↓11.9%

China’s third largest EV maker, Li Auto, saw nearly 12% of its share price shaved off in this latest round of sell-off.

Although the decline is smaller than both Nio’s and Xpeng’s, Li Auto has also been unable to stave off the current technology and growth stock downtrend that came as a result of rising US bond yields.

According to analysts, the company’s delivery guidance for the first quarter of 2021 was also more conservative than expected.

The company said in its Q4 2020 earnings release that it expects to deliver between 10,500 and 11,500 cars in the first quarter of 2021. This would mark at least a 24% drop from the 14,464 vehicles delivered in the December quarter.

Li Auto also said in a 03 March 2021 update that it delivered 2,300 Li ONEs in February 2021, which is down 57% from January’s delivery figure of 5,379 units.

Like Xpeng, it also blamed the lower deliveries on ‘seasonal factors related to the Chinese New Year holiday, as well as the localised Covid-19 outbreaks in northern China’.

Li Auto shares closed 4.1% lower on Wednesday at US$22.77 each.

How to trade Chinese EV stocks with IG

Are you feeling bullish or bearish on Nio, Xpeng and Li Auto’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform, or by investing in the share directly, in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <company name (i.e. Nio)> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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