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China EV sales are seen rising in a seasonally strong November, with Nio (NIO) poised for a sharp rebound. Hopes have also mounted for a shift in China’s ultra-strict Covid policy, which has weighed on automakers.
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On Dec. 1, Nio and its Chinese EV startup peer — Li Auto (LI) and Xpeng (XPEV) — are likely 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.
But Germany’s Volkswagen (VWAGY) told Reuters Monday that its China plants in Chengdu and Changchun have halted or curbed production due to coronavirus cases and parts shortage.
Protests erupted in cities across China over the weekend, including in Chengdu, Shanghai and Beijing. Public frustration has grown over the country’s harsh zero-Covid policy.
Still, 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 — crucially — also up about 8% from 556,000 units in October. For the startups, October sales fell vs. September amid lockdowns.
“Historically, car sales in China have picked up strongly in the year-end months,” Deutshe Bank analyst Edison Yu wrote in a Nov. 25 note. “This should bode well for the NEV (new energy vehicle) segment, given the market is set to see arrival of new models and supported by the ongoing tax incentives.”
China’s EV subsidies are set to expire at year end, which could pull forward some demand.
Nio Sales
Nio’s report for November will follow a mixed October. In October, Nio delivered 10,059 electric vehicles, down 7.5% vs. September but nearly tripling (up 174%) from a year earlier.
Investors will especially look at Nio ET5 numbers. Lockdowns and supply issues held back October volumes of the new sedan model.
Deutsche Bank’s Yu predicts Nio will deliver a record 13,500 EVs in November, up 34% from October. The analyst predicts Nio will deliver 19,500 EVs in December on the back of improving deliveries of the ET5, a Tesla Model 3 rival. The firm believes that the worst may be over for Nio, which has struggled with Covid and operational challenges.
Nio itself guided record Q4 deliveries on Nov. 10, while posting a worse-than-feared Q3 loss.
The Chinese startup 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 Q3’s record 31,607 EV deliveries.
Those will include a small but increasing number of European sales. Nio has expanded deliveries from Norway to several European countries.
Nio stock popped 4.1% to 10.54 on the stock market today. Shares remain below the 50-day and 200-day moving averages.
Xpeng Sales
Challenges could persist in November for this laggard. XPeng sold 5,101 EVs in October, down nearly 40% vs. September, continuing a rapid month-to-month deterioration in sales.
Yu forecasts Q4 deliveries will reach 19,500 EVs, the lowest quarterly sales since Q2 2021. The analyst cited weak demand New models, such as the G9 SUV, are ramping up slower than expected, while some older models are being phased out, he said.
On Nov. 30, Xpeng reports Q3 earnings before the U.S. stock market opens. It’s expected to give an official Q4 delivery estimate as well.
Xpeng stock leapt 5.9% to 7.30 Tuesday, also well below key levels.
Li Auto Sales
November sales for Li Auto could feel the impact from slight delivery delays for certain new L8 and L9 models due to parts shortages, based on local media reports.
But weekly registration data suggest Li Auto will easily top 10,000 deliveries.
Li Auto sold 10,052 vehicles in October, down 13% vs. September and up 31% vs. a year earlier. It trailed Nio by just a handful of units, with Xpeng far behind.
Li began L9 SUV deliveries on Aug. 30 and started L8 deliveries on Nov. 10. It is phasing out its original One model.
On Dec. 9, the startup will report Q3 earnings before the market open. It’s also expected to give a Q4 delivery estimate at that time.
Li Auto stock soared 7.8% to 18.38 Tuesday. The stock is closing in on a falling 50-day moving average but is well below the 200-day line.
BYD Sales
November will be key for BYD, which is on track to sell nearly a million fully electric vehicles in 2022.
BYD sold a milestone 103,157 all-electric EVs in October, zooming up 150% from a year ago. It sold 217,816 all-electric and hybrid-electric vehicles combined in October, up 169% from a year ago and up 8% from September.
Exports remain a small share of total sales but are rising rapidly as a massive international expansion gets underway.
On Dec. 9, BYD is preparing to launch the new Frigate 07 five-seat hybrid SUV. That will add to a slew of new EV launches. That includes the BYD Seal, another Tesla Model 3 rival in late August.
BYDDF stock jumped 5.2% Tuesday, below key levels.
Tesla Stock
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 fell 1.7%, below key major averages.
China EV Sales
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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