July sales reports are out from China’s electric vehicle (EV) makers, sending those shares up in morning trading. Shares of Xpeng (NYSE:XPEV) are leading Chinese EV stocks, up more than 8% to kick off August trading.
Xpeng recorded its highest-ever number of monthly deliveries in July, at 8,040 Smart EVs, a 228% increase year-over-year (YoY), and a 22% increase over June. That volume brought year-to-date total deliveries, as of July 31, 2021, to 38,778 units, representing a 388% increase YoY. Xpeng said last week that it has started building a new plant in Wuhan, Hubei, province.
Li Auto delivered 8,589 Li ONEs in July, breaching the 8,000-vehicle milestone for the first time while hitting a new record. Deliveries were up 11.4% month-over-month and 251.3% YoY, which the company called “a remarkable rate of growth.” As of the end of July, total deliveries in for the year reached 38,743, bringing cumulative deliveries of the Li ONE to 72,340 since its market debut in November 2019.
Nio said July deliveries more than doubled from a year ago but were off by 1.9% from June’s record production results. Nio’s deliveries last month included 3,669 ES6 five-seater SUVs, 2,560 EC6 five-seater coupes and 1,702 ES8 six- or seven-seater SUVs. Cumulative deliveries of the ES8, ES6 and EC6, as of July 31, 2021, reached 125,528.
Chinese EV Stocks Defy Manufacturing Downturn
The production results fueling Chinese EV stocks appear to be defying the manufacturing landscape in the world’s second-biggest economy. The country’s “factory activity expanded in July at the slowest pace in 17 months as higher raw material costs, equipment maintenance and extreme weather weighed on business activity, adding to concerns about a slowdown in the world’s second-biggest economy,” Reuters reported.
The official manufacturing Purchasing Manager’s Index (PMI) dropped to 50.4 in July from 50.9 in June, according to data from Beijing’s National Bureau of Statistics (NBS). However, it stayed above the 50-point mark, which “separates growth from contraction.”
“Chinese carmakers became beneficiaries of a global shortage of semiconductors, with their outbound shipments more than doubling as American and European rivals fell behind”, said Cui Dongshu, secretary general of the China Passenger Car Association (CPCA).
“Chinese drivers’ rising penchant for EVs offered the market leaders, including Tesla (NASDAQ:TSLA), a good opportunity to improve sales,” said Gao Shen, an independent analyst in Shanghai. “For China’s EV start-ups like Xpeng and Li Auto, a monthly sales of 10,000 units will be a meaningful threshold to target because after exceeding that level, a carmaker will be viewed as a powerful player in the automotive industry.”
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor.