Stocks of major Chinese electric vehicle makers Nio (NYSE:NIO), Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) are each in the spotlight today after reporting January delivery figures.
So what do you need to know?
Nio announced that it delivered 9,652 vehicles in January, down 8% from 10,489 vehicles delivered in December. Xpeng said that its January deliveries totaled 12,922, 19% lower in December. Both companies blamed the lower deliveries on the ongoing chip shortage that has hobbled the automotive industry, and electric vehicle makers in particular.
Investors should note that the lower delivery figures arrive as Chinese EV stocks were already under pressure. NIO stock is down 22% year to date, while XPEV stock fell 30% in January. LI stock declined 17% to start 2022.
What Happened With Chinese EV Stocks
The month-over-month EV delivery numbers don’t tell the whole story. Xpeng’s January deliveries, for example, were up 115% year-over-year, and January represented the fifth consecutive month that Xpeng has delivered more than 10,000 vehicles. Xpeng said in a news release that, as of Jan. 31, its cumulative deliveries of all its electric vehicle models — the P7, P5, G3 and G3i — surpassed 150,000 units. Looking to the future, it the company also announced it is upgrading its factory tech during scheduled downtime around the current Lunar New Year holiday.
Rival Nio emphasized that its January deliveries were up 33.6% year-over-year and that its cumulative total deliveries, as of Jan. 31, reached 176,722 units. Nio expanded into Europe in the fourth quarter of 2021, beginning with Norway, and has plans to push into Germany and the United Kingdom this year.
As a result, Nio has been investing heavily to increase its production volumes as it looks to sell its vehicles outside of China. However, the Chinese automakers face stiff competition from U.S.-based Tesla (NASDAQ:TSLA), which remains the world’s biggest EV manufacturer. Last December, Tesla sold a record 70,847 China-made vehicles.
Why It Matters
While Nio, Xpeng and Li Auto are not the only automakers to see production and deliveries hurt by the global semiconductor shortage, their share prices have been hit harder than other EV manufacturers. Ford’s (NYSE:F) stock is down just 3% in 2022, by comparison. The disappointing January delivery numbers could shake confidence in the Chinese automakers at a sensitive time when they are being hard hit by current market volatility.
More broadly, the EV delivery numbers provide some insights into the health of the Chinese economy. China continues to grapple with resurgent Covid-19 variants and has imposed new lockdown measures that have impacted domestic consumption and the economy. Its central bank recently cut interest rates to help bolster economic growth, while the Federal Reserve has telegraphed that it plans to raise interest rates this year to cool off the economy and inflation.
What’s Next for NIO, XPEV and LI
NIO, XPEV and LI stocks had been trending higher in recent trading sessions after hitting new 52-week lows in January. The most recent delivery numbers could see those gains disappear.
While the immediate outlook for Chinese electric vehicle companies remains negative, there is still reason to believe that the share prices will rise over the long term. The global semiconductor shortage is expected to ease this year, enabling the companies to get production back on track. And, as mentioned, one month of data does not tell the whole story when it comes to these stocks.
On the date of publication, Joel Baglole 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.
