Disappointing delivery numbers for the month of August have Chinese electric vehicle (EV) stocks trading lower today.
Shares of Nio (NYSE:NIO), Li Auto (NASDAQ:LI), and Xpeng (NYSE:XPEV) are each slumping 2% this morning after their August deliveries fell short of Wall Street expectations. The disappointing numbers come following months of renewed Covid-19 restrictions in China that forced the automakers to curtail their manufacturing plants or shut them down completely for weeks at a time. The automakers ramped up production over the summer but are struggling to fill back orders that accumulated during the recent lockdowns.
What Happened
Deliveries from Li Auto were particularly ugly in August. The automaker reported that it delivered 4,571 vehicles in the month, down 52% from August 2021 and a 56% decline from July of this year. Li Auto said its deliveries were impacted by the launch of its new Li L9 and the upcoming Li L8, which hurt demand for its main Li ONE electric vehicle.
At the same time, XPeng reported that it delivered 9,578 vehicles in August, up 33% from a year earlier but down 17% compared to July of this year. Nio fared better than its rivals, reporting that it delivered 10,766 vehicles in August, an 81.6% year-over-year increase but only up a tepid 6% from July.
Why It Matters
The August delivery numbers show that EV makers in China are continuing to struggle to get their production back online and increase deliveries. More broadly, the latest numbers for China’s EV makers demonstrate the impact that rolling Covid-19 lockdowns across China are having on the nation of 1.4 billion people’s manufacturing sector.
Coincidentally, news of the sluggish August deliveries among Chinese EV makers is also sending shares of U.S. electric vehicle maker Tesla (NASDAQ:TSLA) down nearly 2% today. While Tesla is headquartered in Texas, the company has a major manufacturing plant located near Shanghai, China and the Chinese market is one of its biggest. Covid-19 restrictions are therefore likely to impact Tesla’s sales as well.
What’s Next for Chinese EV Stocks
Stocks of Chinese electric vehicles take a hit today following the release of the August delivery numbers. Today’s downturn compounds the losses for the EV maker’s shares this year. Since January, NIO and XPEV stocks have each declined more than 40%. LI stock is down 10% on the year. Going forward, the Chinese companies will need to show investors that their production levels are back in full swing and that their deliveries are growing substantially.
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.
