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China EV sales are seen rising in a seasonally strong November, with Nio (NIO) poised for a sharp rebound as supply headwinds ease and new models ramp up. XPeng (XPEV) shares rocketed Wednesday, leading a broad surge for China EV stocks, after a better-than-feared Q4 delivery outlook. More signs emerged Wednesday of a shift in China’s ultra-strict Covid policy, which has weighed on automakers.
On Dec. 1, Nio, XPeng and their Chinese EV startup peer Li Auto (LI) are set to report November sales. Chinese EV giant BYD (BYDDF) should follow within a couple of days.
All of these EV makers are increasingly competing with Tesla (TSLA) in the world’s largest EV market.
Retail NEV sales are expected to reach 600,000 in November, the China Passenger Car Association estimates. That would be up 58.5% vs. a year ago and also up about 8% from October. Unlike BYD, the startups all saw October sales fall vs. September amid lockdowns.
“New energy vehicles,” or NEVs, include all-electric, hybrid-electric and fuel-cell vehicles.
“Historically, car sales in China have picked up strongly in the year-end months,” Deutsche Bank analyst Edison Yu wrote in a Nov. 25 note. He 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 year end, which could pull forward some demand.
Chinese EV stocks surged Tuesday and soared again Wednesday. Local authorities continued to ease some ‘zero-Covid’ rules Wednesday after protests against the policy erupted in several cities over the weekend. China’s top leadership is also pushing for a more “targeted and precise” approach to fighting the coronavirus, local media said.
Check back Thursday for November results. In October, Nio delivered 10,059 electric vehicles, down 7.5% vs. September but up 174% from a year earlier.
Investors will especially look at November’s ET5 numbers. Lockdowns and supply issues held back October volumes of the new sedan, a Tesla Model 3 rival.
Deutsche Bank’s Yu predicts Nio will deliver a record 13,500 EVs in November, up 34% from October, and 19,500 EVs in December.
Nio itself guided record Q4 deliveries on Nov. 10, while posting a worse-than-feared Q3 loss.
It expects to deliver 43,000-48,000 EVs in Q4, up 72%-92% vs. a year earlier. It would also be up 36%-52% from 31,607 EV deliveries in Q3.
Those deliveries will include a small but increasing number of European sales. Nio has expanded deliveries from Norway to several European countries.
Nio stock shot up 17.3% to 12.31 on the stock market today, vaulting above its 50-day line intraday. Shares of Nio and its China EV peers remain below the 200-day line after a tumble in the past year.
Check back later for November results. XPeng sold 5,101 EVs in October, down nearly 40% vs. September, continuing a rapid month-to-month deterioration in sales.
Early Wednesday, XPeng reported a wider-than-expected Q3 loss of 39 cents per ADR share. Revenue rose 19.3% to RMB 6.82 billion, or $959.2 million.
It sees Q4 deliveries of 20,000-21,000 EVs, down roughly 50%-52% vs. a year earlier and down significantly from Q3’s 29,570. With October deliveries in hand and November sales likely similar, that implies XPeng deliveries will rebound to around 10,000 in December.
Deutsche Bank’s Yu had forecast XPeng would deliver 19,500 EVs in Q4. New models, such as the G9 SUV, are ramping up slowly, while some older models are being phased out, he said.
XPeng stock soared more than 36% to 10.01 Wednesday, moving above its 50-day line. Shares popped 6.5% to 7.34 Tuesday.
On Wednesday, the southern Chinese city of Guangzhou, where XPeng is based, relaxed Covid-19 restrictions in various districts. Other major Chinese cities, including Shanghai and Zhengzhou, home to the world’s largest iPhone factory, also said Wednesday they were lifting Covid lockdowns.
Check back later for November results. Li Auto sold 10,052 vehicles in October, down 13% vs. September and up 31% vs. a year earlier.
Li Auto has been experiencing slight delivery delays for certain new L8 and L9 models due to parts shortages in November, based on local media reports. But weekly registration data suggest Li Auto will easily top 10,000 deliveries.
Li began L9 SUV deliveries on Aug. 30 and started L8 deliveries on Nov. 10. It has phased out its original One model.
On Dec. 9, Li Auto will report Q3 earnings before the market open. It’s also expected to give a Q4 delivery estimate at that time.
Li Auto stock surged 16% to 21.53 Wednesday, moving back above a long-sliding 50-day line. Shares soared 8.7% to 18.53 Tuesday.
Check back later for November results. In October, BYD sold a milestone 103,157 all-electric EVs, up 150% from a year ago. It sold 217,816 all-electric and hybrid-electric vehicles, combined, in October.
BYD is on track to sell nearly a million fully electric vehicles in 2022.
Exports remain a small share of total sales but are rising rapidly. The Warren Buffett-backed EV maker has a massive international expansion underway. On Tuesday, BYD said it would enter the personal EV market in Mexico next year.
On Dec. 9, BYD is preparing to launch the Frigate, a hybrid SUV. That will add to a slew of new EV launches. The BYD Seal, a Tesla Model 3 rival, launched in late August.
BYDDF stock popped 7.7% to 50.21, back above its 50-day line for the first time since early August. Shares jumped 5.2% Tuesday. BYD trades over the counter in the U.S.
Tesla does not release China-only sales, but weekly registration data suggest a strong month for local China sales. A late October price cut and various other incentives, along with Tesla’s big production increase and the soon-to-expire China EV subsidies, are likely contributing factors.
Tesla stock rose 1.1% intraday. On Tuesday, shares fell 1.1%, trading below key major averages.
China’s electric-car market stayed red-hot in the first 10 months of 2022, despite headwinds.
Over that period, NEV sales soared 110%, while the broader passenger car market grew just 14%, according to data from China Association of Automobile Manufacturers. In October alone, China’s all-electric sales jumped 70% to 508,000.
“Of the past 10 months, the (NEV) segment has registered seven monthly triple-digit growth on a year-over-year basis, backed by strong underlying demand and tax incentives offered by the government,” Deutsche Bank analysts said in their Nov. 25 note.
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