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Nio, Xpeng & Li Auto Posted Blended Supply Figures For April. How Will This Influence Their Shares? – Trefis

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Chinese language electrical automobile majors Nio (NYSE: NIO), Li Auto (NASDAQ: LI), and Xpeng (NYSE: XPEV) offered combined supply figures for the month of April, with gross sales development slowing or declining on a month over month foundation, pushed by the present scarcity of semiconductors and presumably as a result of rising competitors within the Chinese language EV market. Though all three firms reported strong year-over-year development numbers (2x to 4x), the sequential figures are extra intently tracked for fast-growing firms. Nio delivered 7,102 autos in April 2021, marking a decline of about 2% from March. Xpeng delivered 5,147 autos, with the quantity remaining nearly flat in comparison with March. Li Auto managed to develop deliveries by about 13% versus final month to five,539, though its sequential development fee was considerably decrease than in April.

Now, the slowdown wasn’t completely sudden. The continuing chip scarcity has hit the automotive business the toughest, with main gamers starting from Volkswagen to Toyota having to idle manufacturing vegetation. Nio, for example, had indicated throughout its Q1 earnings name final week that the present chip scarcity was extreme, guiding for sequential supply development of nearly 7% on the mid-point for the second quarter. Competitors has additionally been mounting, with Tesla (NASDAQ: TSLA) now promoting a domestically made model of its Mannequin Y and huge Chinese language gamers equivalent to BYD Auto additionally gaining traction. Nevertheless, the present sluggishness is probably going priced into the shares which have underperformed considerably this yr. Nio inventory stays down by about 25% year-to-date, Li Auto is down 39%, and Xpeng is down by about 32%. See our evaluation on Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? for an outline of the monetary and valuation metrics of the three Chinese language EV gamers.

Whereas automakers and client electronics gamers have been hit by the semiconductor provide crunch, there are a handful of firms which might be benefiting from the state of affairs. See our theme on Shares That Profit From The Semiconductor Scarcity for extra particulars.

[4/19/2021] Why Are Chinese language EV Shares Declining?

Chinese language electrical automobile shares had a comparatively powerful week, with Nio (NYSE: NIO) declining by about 5%, Xpeng (NYSE: XPEV) declining by about 11%, and Li Auto (NASDAQ:LI) inventory falling by about 15% over the past 5 buying and selling days. As compared, the S&P 500 gained nearly 1.5% over the past week. The three shares are additionally down by between 30% to 40% year-to-date. So what’s driving the current sell-off? Firstly, buyers are possible involved that the worldwide semiconductor scarcity which is weighing within the automotive business might more and more impression Chinese language EV gamers. Secondly, competitors within the Chinese language EV area can be mounting with giant Chinese language automakers, world auto majors, and upstarts betting massive on electrical autos in China. For instance, China’s largest carmaker, Geely, is launching a premium electrical automotive model of its personal. Ford additionally just lately began taking orders for its all-electric Mustang Mach-E crossover automobile in China. Even client electronics behemoth Xiaomi plans to take a position about $10 billion in creating EVs. With the Shanghai Motor Present slated to start on April 21, we’re more likely to see loads of new EVs making their debuts in China. Though the EV market in China is sizable with round 1.3 million autos bought in 2020 and gross sales projected to develop by over 50% this yr [], increased competitors will put strain on the likes of Nio, Xpeng, and Li Auto.

See our evaluation on Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? for an outline of the monetary and valuation metrics of three main Chinese language EV gamers.

[3/29/2021] Nio Inventory A Purchase? 

U.S. listed Chinese language electrical automobile shares have declined significantly this yr. Nio (NYSE: NIO) and Xpeng (NYSE: XPEV) are down by about 25% year-to-date, whereas Li Auto (NASDAQ:LI) is down by shut to twenty%. As compared, the broader NASDAQ index is up by 2% year-to-date. So what’s driving the decline? Whereas excessive development shares, usually, have been impacted on account of rising rates of interest, Chinese language EV gamers are additionally being damage by a few different elements. Firstly, competitors is mounting. As an example, Tesla (NASDAQ: TSLA) just lately began promoting a domestically made model of its Mannequin Y, whereas China’s largest carmaker, Geely, is launching a premium electrical automotive model of its personal. Secondly, the worldwide chip scarcity has began to hit Chinese language EV majors. Nio will briefly droop the automobile manufacturing exercise at its manufacturing plant in Hefei for 5 working days ranging from March 29 as a result of a scarcity of chips, and it’s possible that different gamers may even be impacted. Thirdly, U.S.-listed Chinese language shares are being weighed down by considerations that they could possibly be de-listed from American exchanges, with the SEC starting to evaluation the monetary audits of abroad firms.

General, itemizing associated considerations apart, we predict that Chinese language EV shares appear like comparatively good bets at present ranges. The EV market in China is huge, with deliveries in 2020 standing at about 1.3 million items and gross sales projected to develop by over 50% this yr. [] Homegrown manufacturers equivalent to Nio, Li Auto, and Xpeng are higher positioned to learn, given their deeper information of the native markets, favorable regulation, and distinctive improvements focused at Chinese language shoppers. Whereas these firms commerce at excessive multiples, they’ve development on their facet, with all three firms on monitor to at the least double income this yr. See our evaluation on Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? for an outline of the monetary and valuation metrics of three main Chinese language EV gamers.

[3/19/2021] Nio Inventory A Purchase? 

Nio inventory (NYSE: NIO) is down by nearly 25% over the past month, buying and selling at ranges of round $42 per share. The inventory can be down by about 34% from its all-time highs. So what’s driving the correction? Firstly, there was a broader sell-off in high-growth shares on account of rising rates of interest. Secondly, competitors within the luxurious electrical SUV area in China is rising, with Tesla (NASDAQ: TSLA) commencing deliveries of a domestically made model of its Mannequin Y. Individually, the worldwide scarcity of semiconductors has additionally damage automotive firms and buyers are possible involved that Nio could possibly be impacted.

That mentioned, we predict Nio inventory appears to be like like a comparatively good worth in the mean time. Though the inventory nonetheless trades at a seemingly steep 12x projected 2021 revenues, Nio is rising very quick. Gross sales are projected to greater than double this yr and to develop by nearly 65% in 2022, per consensus estimates. We predict the corporate ought to proceed to fare nicely regardless of rising competitors. The EV market in China is huge, with gross sales in 2020 standing at about 1.3 million items and gross sales are projected to develop by over 50% this yr. []  Nio might have an edge in China, being a homegrown model that gives distinctive improvements equivalent to battery-as-a-service.

See our evaluation on Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? for an outline of the monetary and valuation metrics of three main Chinese language EV gamers.

[3/2/2021] Nio Inventory Updates

Chinese language luxurious electrical automobile maker Nio (NYSE:NIO) revealed a combined set of This autumn 2020 outcomes on Monday. Whereas the corporate’s loss per American Depositary Share was wider than anticipated at about -$0.14, revenues got here in barely forward of expectations rising 46.7% sequentially to about $1.02 billion, pushed by stronger deliveries of the ES8, ES6, and EC6 autos. Nio’s inventory was down by about 5% in pre-market buying and selling on Tuesday, possible as a result of firm’s lighter-than-expected steering.

Nio expects to ship between 20,000 and 20,500 autos in Q1 2021, marking a rise of about 17% on the midpoint from This autumn 2020. [] Contemplating that the corporate has already delivered 7,225 autos in January, gross sales over February and March are more likely to be barely weaker in comparison with January. Though that is presumably as a result of companies remaining shut by means of the Lunar New yr competition interval that occurred in early February, it must be famous that competitors within the electrical SUV area in China can be mounting. Tesla (NASDAQ: TSLA) just lately began deliveries of a domestically made model of its Mannequin Y compact SUV. The automobile is comparatively competitively priced and will put strain on luxurious EV gamers equivalent to Nio. Individually, the corporate has indicated {that a} scarcity in semiconductors and batteries is more likely to reduce its manufacturing over Q2 2021 to 7,500 autos per 30 days, down from 10,000.

See our evaluation on Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? for an outline of the monetary and valuation metrics of three main Chinese language EV gamers.

[Updated 2/8/2021] Will Tesla’s Mannequin Y Harm Nio and Li Auto?

Tesla (NASDAQ: TSLA) is beginning deliveries of a domestically made model of its Mannequin Y compact SUV in China. Will this impression high-flying Chinese language electrical automobile makers Nio (NYSE: NIO) and Li Auto (NASDAQ:LI) – who focuses on SUVs and have gained a number of traction within the Chinese language market in current quarters. It appears to be like prefer it. There have been indicators of a slowdown for each EV gamers of their January 2021 supply figures. Deliveries of Li Auto’s Li-One SUV declined by 12% versus December to five,379. Nio, too, noticed supply development in January gradual to three% in comparison with December, when deliveries grew by round 30%. Whereas these traits could not completely be tied to Tesla’s entry into the crossover market, Tesla is predicted to place strain on each firms.

Tesla has been gaining floor in China. It bought over 23,000 domestically made Mannequin 3 autos in China in December – that’s extra autos than the massive three EV startups Nio, Li Auto, and Xpeng put collectively. Now the Mannequin Y is arguably going to be extra in style in comparison with the Mannequin 3, contemplating Chinese language buyer’s choice for crossovers and SUVs. Though the Mannequin Y is unlikely to qualify for China’s nationwide subsidy for electrical autos, not like the Mannequin 3 sedan, Tesla has additionally priced the automobile competitively, beginning at about RMB 339,900 ($52,500). That’s under the RMB 353,600 backed beginning value for Nio’s EC6 SUV, and barely forward of the RMB 328,000 backed value for Li Auto’s SUVs. Tesla’s stronger world model picture and software program options might make its autos rather more enticing to Chinese language prospects. Tesla additionally has the size to tackle these firms within the SUV market. Its Shanghai plant which started operations in late 2019 is more likely to produce as a lot as half one million autos this yr. As compared, Nio is trying to improve manufacturing capability to about 150,000 items.

Nevertheless, Nio and Li Auto do have some benefits. Charging infrastructure stays restricted in China, therefore Nio is betting massive on modular batteries for its EVs that may be swapped out in a matter of minutes, serving to to cut back vary anxiousness whereas offering batteries as a service (BaaS) beneath a subscription program. Equally, Li’s focus is on autos which have a small gasoline engine that may generate further electrical energy for the battery, lowering reliance on EV-charging infrastructure. These firms even have the backing of the Chinese language authorities and massive tech firms and this might show a bonus not simply from the attitude of understanding the market higher, but additionally from a regulatory standpoint. For instance, Nio’s backers embody Tencent and Baidu. The corporate has additionally been bailed out by the Chinese language authorities prior to now.

See our evaluation on Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? for an outline of the monetary and valuation metrics of three main Chinese language EV gamers.

[1/11/2021] Is Nio Worthy Of A $100 Billion Valuation?

Nio (NYSE:NIO) inventory has rallied by over 15% over the past week, amid anticipation forward of the corporate’s annual Nio day occasion that was held on Saturday. Nio’s market cap now stands at a whopping $93 billion- nearly as a lot as Common Motors and Ford mixed. Does Nio warrant such a valuation? The corporate is definitely rising quick, with Income poised to double to about $5 billion in 2021 with deliveries rising quick (Nio delivered a report 7,000 automobiles in December). The addressable market can be rising shortly, contemplating that China – Nio’s house nation – has set a goal that 25% of automotive gross sales by 2025 should be new vitality autos that aren’t purely gasoline-driven. That being mentioned, is Nio constructing a aggressive benefit to justify its present valuation and fend off rivals because the market will get extra crowded?

Nio seems to be innovating in two key areas – specifically battery expertise and self-driving software program, and this can be a massive a part of the narrative driving the inventory. Nio is betting massive on modular batteries for its EVs that may be swapped out in a matter of minutes, serving to to cut back vary anxiousness whereas offering batteries as a service (BaaS) beneath a subscription program. Nevertheless, that is unlikely to provide the corporate an edge, as different gamers can even simply replicate this. The truth is, China’s EV coverage encourages constructing in battery swapping. EVs priced above RMB300,000 (round $46,000) are granted subsidies provided that they’ve a swapping possibility. Nio has additionally unveiled a denser battery pack with 150 kWh of capability (up from 100kWh presently). This battery possibility can be accessible solely in late 2022 – nearly 2 years out – and it’s potential that different gamers might even have related capability batteries by then, working with mainstream battery cell suppliers equivalent to CATL.

The corporate spent a great deal of time throughout its Nio Day occasion discussing the self-driving tech on its new sedan due in 2022 and a associated month-to-month subscription program. The main target gave the impression to be extra on the {hardware} equivalent to high-resolution cameras, lidar sensors, and Nvidia processors – all of that are more likely to be accessible to most different automakers. Nevertheless, what actually offers firms an edge in self-driving is the standard of software program and the supply of huge quantities of information (miles pushed) to enhance algorithms.  For perspective, Tesla has logged a complete of three billion autonomous miles as of final April whereas Google’s Waymo logged about 20 million miles. It’s not clear how Nio will fare on these counts.

General, whereas Nio is definitely rising quick, constructing a model that’s turning into synonymous with luxurious Chinese language EVs, its valuation appears to be like wealthy in our view, as we don’t see a sustainable aggressive benefit but. Nio now trades at about 18.6x consensus 2021 Revenues, which implies that it’s valued equally to dear Tesla (NASDAQ:TSLA), whose sturdy software program and self-driving capabilities partly justify its valuation.

[12/15/2020] Why Has Nio Inventory Been Trending Decrease 

Chinese language premium Electrical automobile maker Nio (NYSE:NIO) has seen its inventory decline by nearly 20% over the past two weeks, falling to ranges of round $41 per share regardless of posting a robust supply quantity for the month of November with gross sales greater than doubling year-over-year to five,291 items. Whereas a part of the decline is probably going as a result of some revenue reserving after an over 10x rally this yr, Nio’s transfer to boost about $2.65 billion through a sizeable secondary share providing additionally damage the inventory. The providing was priced at about $39 per American depositary shares (ADS), a reduction to the market value of about $42 as of Friday’s shut. That mentioned, this must be a web constructive for the corporate within the long-run. The funding nonetheless comes at enticing valuations (Nio trades at a whopping 23x projected 2020 Income, forward of Tesla) and dilution of present shareholders is proscribed. Furthermore, the funds ought to give the corporate a cushty money cushion, with the proceeds possible for use to fund R&D for brand spanking new autos and autonomous driving expertise and to broaden the corporate’s gross sales community.

[Updated 11/18/2020] Is Nio Overvalued?

Nio (NYSE:NIO) – the premium Chinese language electrical automobile producer – reported its Q3 2020 outcomes on Tuesday, posting a smaller than anticipated quarterly loss, pushed by report deliveries and better margins. Whereas Revenues rose by 22% sequentially to RMB 4.53 billion (about $667 million), gross margins expanded by about 480 foundation factors to 12.9% pushed by decrease materials price and higher manufacturing effectivity. Nio continues to learn from sturdy demand and incentives for EVs in China, guiding that it might ship between 16,500 to 17,000 autos over This autumn. This interprets right into a sequential development of at the least 35%. []

See our evaluation Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? which compares the monetary efficiency and valuation of the most important U.S. listed Chinese language electrical automobile gamers.

Regardless of the stronger-than-expected outcomes and This autumn steering, we predict Nio inventory appears to be like overvalued. The inventory is up by over 12x year-to-date and trades at about 27x projected 2020 Revenues. As compared, Tesla – a extra mature EV participant, with strong software program capabilities and rising publicity to China – trades at about 13x projected gross sales. Whereas Nio’s development charges are definitely increased than Tesla’s, it is usually riskier contemplating the extraordinary competitors within the Chinese language EV market, which has a number of a whole bunch of producers.

[Updated 11/16/2020] As Nio Inventory Continues To Surge, Are Buyers Getting Forward Of Themselves?

Nio (NYSE:NIO) – the premium Chinese language EV producer – has seen its inventory soar a whopping 58% over the past month buying and selling at about $45 per share, pushed by sturdy supply numbers for October and a conducive regulatory setting in China for EVs. After a 12x rally yr to this point, Nio’s market cap is now increased than Common Motors (NYSE:GM). Whereas Nio is little doubt rising shortly, with Income on monitor to double this yr, the inventory appears to be like overvalued in our view for a few causes. Firstly, there’s a chance that Tesla might give Nio a run for its cash in its house turf, because it prepares to launch a domestically made Mannequin Y SUV, which experiences point out could possibly be priced cheaper than Nio’s entry-level SUV ES6, which begins at $54k. Along with a doubtlessly lower cost, Tesla’s stronger model picture and software program options might make its autos rather more enticing to prospects. The corporate might additionally face challenges additional scaling up manufacturing. For instance, Nio recalled about 5,000 autos final yr after experiences of a number of fires. Nio can be very richly valued at about 26x projected 2020 Revenues, in comparison with Tesla which trades at about 12x. Whereas Nio’s development charges are definitely increased than Tesla’s, the dangers are additionally increased given the extraordinary competitors within the Chinese language EV area the place there are over 400 producers.

[11/3/2020] Robust October Deliveries Drive Chinese language EV Shares

The inventory costs of main U.S. listed Chinese language electric-vehicle (EV) producers soared on Monday, as they reported sturdy deliveries for  October. Nio (NYSE:NIO) – one of many largest EV startups in China – noticed its inventory soar by about 9%, because it reported that deliveries in October nearly doubled year-over-year to five,055 autos. Xpeng (NYSE: XPEV), one other premium EV participant noticed its inventory rise by about 7%, because it delivered about 3,040 autos by means of the month, marking a rise of about 230% from a yr in the past, pushed primarily by gross sales of its P7 sedan which was launched earlier this yr. Nevertheless, deliveries had been barely decrease month-over-month. Li Auto (NASDAQ: LI), an organization that sells EVs that even have a small gasoline engine – mentioned that it delivered 3,692 of its Li ONE SUVs in October, marking a month-over-month improve of about 5%. The corporate started manufacturing solely late final yr.

[10/30/2020] How Do Nio, Xpeng, and Li Auto Examine

The Chinese language electrical automobile (EV) area is booming, with China-based producers accounting for over 50% of worldwide EV deliveries. Demand for EVs in China is more likely to stay strong because the Chinese language authorities desires about 25% of all new automobiles bought within the nation to be electrical by 2025, up from roughly 5% at current. [] Whereas Tesla is a frontrunner within the Chinese language luxurious EV market pushed by manufacturing at its new Shanghai facility,  Nio (NYSE:NIO), Xpeng (NYSE: XPEV), and Li Auto (NASDAQ: LI) – three comparatively younger U.S. listed Chinese language electrical automobile gamers, have additionally been gaining traction. In our evaluation  Nio, Xpeng & Li Auto: How Do Chinese language EV Shares Examine? we evaluate the monetary efficiency and valuation of the most important U.S. listed Chinese language electrical automobile gamers. Components of the evaluation are summarized under.

Overview Of Nio, Li Auto & Xpeng’s Enterprise

Nio, which was based in 2014, presently affords three premium electrical SUVs, ES8, ES6, and EC6, that are priced beginning at about $50k.  The corporate is engaged on creating self-driving expertise and likewise affords different distinctive improvements equivalent to Battery as a Service (BaaS) –  which permits prospects to subscribe for automotive batteries, quite than paying for them upfront. Whereas the corporate has scaled up manufacturing, it hasn’t come with out challenges, because it recalled about 5,000 autos final yr after experiences of a number of fires.

Li Auto sells Prolonged-Vary Electrical Autos, that are primarily EVs that even have a small gasoline engine that may generate further electrical energy for the battery. This reduces the necessity for EV-charging infrastructure, which is presently restricted in China.  The corporate’s hybrid technique seems to be paying off – with its Li ONE SUV, which is priced at about $46,000 – rating because the top-selling SUV within the new vitality automobile phase in China in September 2020. The brand new vitality phase contains gas cell, electrical, and plug-in hybrid autos.

Xpeng produces and sells premium electrical autos together with the G3 SUV and the P7 four-door sedan, that are roughly positioned as rivals to Tesla’s Mannequin Y SUV and Mannequin 3 sedan, though they’re extra inexpensive, with the essential model of the G3 beginning at about $22,000 publish subsidies. The G3 SUV was among the many prime 3 Electrical SUVs by way of gross sales in China in 2019. Whereas the corporate started manufacturing in late 2018, initially through a take care of a longtime automaker, it has began manufacturing at its personal manufacturing unit within the Guangdong province.

How Have The Deliveries, Revenues & Margins Trended

Nio delivered about 21k autos in 2019, up from about 11k autos in 2018. This compares to Xpeng which delivered about 13k autos in 2019 and Li Auto which delivered about 1k autos, contemplating that it started manufacturing solely late final yr. Whereas Nio’s deliveries this yr might method about 40k items, Li Auto and Xpeng are more likely to ship round 25k autos with Li Auto seeing the best development. Over 2019, Nio’s Revenues stood at $1.1 billion, in comparison with about $40 million for Li Auto and $330 million for Xpeng. Nio’s Revenues are more likely to develop 95% this yr, whereas Xpeng’s Revenues are more likely to develop by about 120%. All three firms stay deeply lossmaking as prices associated to R&D and SG&A stay excessive relative to Revenues. Nio’s Web Margins stood at -195% in 2019, Li Auto’s margins stood at about -860% whereas Xpeng’s margins stood at -160%. Nevertheless, margins are possible to enhance sharply in 2020, as volumes choose up.

Valuation

Nio’s Market Cap stood at about $37 billion as of October 28, 2020, with its inventory value rising by about 7x year-to-date as a result of surging investor curiosity in EV shares. Li Auto and Xpeng, which had been each listed within the U.S. round August as they seemed to capitalize on surging valuations, have a market cap of about $15 billion and $14 billion, respectively. On a relative foundation, Nio trades at about 15x projected 2020 Revenues, Li Auto trades at about 12x, whereas Xpeng trades at about 20x.

Whereas valuations are definitely excessive, buyers are possible betting that these firms will proceed to develop within the home market, whereas ultimately enjoying a bigger position within the world EV area leveraging China’s comparatively low-cost manufacturing, and the nation’s ecosystem of battery and auto components suppliers. Of the three firms, Nio could be the safer wager, contemplating its barely longer monitor report, increased Revenues, and investments in expertise equivalent to battery swaps and self-driving. Li Auto additionally appears to be like enticing contemplating its fast development – pushed by the uptake of its hybrid powertrains – and comparatively enticing valuation of about 12x 2020 Revenues.

Electrical autos are the way forward for transportation, however selecting the correct EV shares may be difficult. Investing in Electrical Car Element Provider Shares could be a good various to play the expansion within the EV market.

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