Tesla’s China Rivals Nio, Li Auto, XPeng Amp Up Their EV Game. Two Stocks Double This Year.| Investor’s Business Daily

Nio (NIO), Li Auto (LI) and XPeng (XPEV) are due to report July sales Tuesday. Nio stock and Li Auto extended their hot streak Monday while XPeng took a breather, after huge rallies for Tesla’s China rivals in recent weeks.

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Investors will watch for another big month from Nio after its June sales jumped, reversing lackluster demand. Overall China EV sales also surged in June on rebounding demand.

Chinese EV giant BYD (BYDDF) will also report July sales in early August. Tesla (TSLA), which triggered a price war this year, reports global EV sales on a quarterly basis.

Last Thursday, Morgan Stanley raised its price target on Nio stock, Xpeng and Li Auto, following the launch of several new and more affordable electric vehicles.

“The lackluster first half of 2023 is now behind us, and we are starting to see an inflection point of meaningful operational improvement,” Morgan Stanley’s Tim Hsiao said in a note to clients. He cited “volume upturn, policy tailwinds, autonomous driving and technology monetization.”

Here are July sales expectations for the Chinese EV makers. Check back for updates on results.

Tesla’s China Rivals: Li Auto

Investors will watch whether Li’s July deliveries can sustain the 30,000 mark.

Its recent launches include the L7, L8 and L9 SUVs. Li’s first all-electric vehicle is due by end of year.

Li Auto, the clear leader among China EV startups this year, sold 32,575 EVs in June and 86,533 for the full second quarter, well above its prior guidance.

Shares of Li Auto rose 0.2% to 42.80 on the stock market today, well above the 50-day moving average. Li Auto stock has jumped roughly 22% in the past month and has more than doubled year to date, soaring 109.7%.

The EV startup belongs to the IBD 50 list of top growth stocks. Li reports earnings for the second quarter on Aug. 8.

Nio

Investors will watch whether Nio can breach the 20,000 delivery mark in July, which has been the subject of speculation on Chinese social media.

In July, Nio’s EV lineup was mostly new or totally overhauled, including the flagship ES6, and boasting lower prices after Nio joined an EV price war in June.

Nio delivered 10,707 EVs in June and 23,520 in Q2 as a whole, near the low end of guidance.

Shares of Nio popped 3.8% to 15.30 Monday, rallying further above the 50-day line.

Nio stock has jumped 30% in the past five sessions and nearly 58% in the past month as anticipation builds for a strong second half of 2023. It’s also up about 57% year to date but remains far below the January 2021 high.

XPeng

July sales will include the G6, a Model Y rival that’s considerably cheaper. Management is reportedly targeting monthly sales of 10,000 units for the competitively priced electric SUV.

XPeng delivered 8,620 EVs in June and 23,205 in Q2, above the top end of its guidance.

Shares dived 10.6% to 20.92 Monday, after UBS downgraded XPEV stock, citing its massive run in recent weeks.

But XPeng stock still holds a 29.6% gain over the past five sessions and is up 54.7% over the past month. XPEV stock has more than doubled year to date, rocketing almost 110%, though it remains far below the November 2020 high.

Last Wednesday, XPeng and Volkswagen (VWAGY) announced a deal to jointly develop two electric cars, using the Chinese startup’s platform and software. That could lead to more partnerships between global automakers and Chinese EV startups and reverse the old trend of Western technology underpinning the Chinese car industry, Morgan Stanley analysts said.

BYD

BYD seeks to sell at least 3 million vehicles in 2023. That would require the Warren Buffett-backed EV maker to sell roughly 290,000 per month in the second half, including July.

Chinese auto and battery giant BYD sold a record 253,046 EVs in June and 703,561 in Q2, including hybrid vehicles. Its EV sales are mostly in China though it’s expanding overseas.

By comparison, Tesla delivered 466,140 EVs worldwide in Q2.

BYD continues to launch both luxury and cheaper electric vehicles. It began delivering the N7, a crossover EV from its premium Denza brand, on Saturday. The Denza N7 is seen as a Model Y rival. The Denza N8 SUV will launch on Aug. 5.

Shares of BYD gained almost 1% to 35.69 Monday, an 11-month high. That’s in range of a 34.98 buy point from a flat base, base-on-base formation.

BYD stock has surged more than 11% in the past month and 45.3% year to date. It remains below the June 2022 decade high.

China EV Sales

Sales of new energy vehicles (NEVs) in China, including all-electric cars and plug-in hybrids, jumped more than 25% in June to 665,000 while the overall car market shrank 2.9%.

In the first half of 2023, China EV sales surged more than 37% to 3.09 million. Demand for electric cars has steadily rebounded after a slow start to the year.

Analysts expect new and more affordable electric vehicles to boost second-half sales for Tesla’s China rivals. China also extended a tax break for purchasing EVs in June.

The world’s largest EV market is showing slower growth.

China EV sales more than doubled in 2021 and 2022. They are expected to grow around 30% this year.

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