Chinese electric car startup Li Auto saw deliveries surge by nearly 66% in the first quarter from a year ago.
Zhang Peng | Lightrocket | Getty Images
BEIJING — Chinese electric car brand Li Auto delivered more cars in March than Xpeng did in the first quarter, according to company releases.
Li Auto delivered 20,823 vehicles in March — for a total of 52,584 deliveries in the first three months of the year. That’s up by nearly 66% from the first quarter of 2022.
In contrast, Xpeng only delivered 18,230 cars in the first quarter — down by about 47% from the same period a year ago.
Xpeng delivered 7,002 vehicles in March, above the monthly average for the first quarter. Nearly half of the deliveries last month were of the company’s new P7i sports sedan that launched in March.
Nio reported first-quarter deliveries of 31,041, up 20.5% from a year ago. The company delivered 10,378 vehicles in March.
Li Auto’s vehicles — all SUVs — each come with a fuel tank to charge the battery and extend driving range.
The company claimed in a release it now has nearly 20% of the market for SUVs in the 300,000 yuan ($43,674) to 500,000 yuan price range in China.
For comparison, Tesla’s mid-size SUV, the Model Y, sells in a price range of 261,900 yuan to 361,900 yuan.
Xpeng’s G9 SUV starts at 309,900 yuan. The company’s new P7i sedan starts at 249,900 yuan — and costs 269,900 yuan if drivers want to use Xpeng’s assisted driving tech for cities. Tesla’s version of the tech, called Full Self Driving, isn’t available in China.
However, so far Xpeng’s assisted driving tech for cities is only available in Shenzhen, Guangzhou and Shanghai — where rollout began Friday.
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The Chinese electric car startups’ delivery figures pale in comparison with BYD, whose numerous models sell at a range of prices.
BYD said it sold 264,647 purely battery-powered passenger cars in the first three months of the year, up more than 80% from a year ago. Hybrid passenger vehicle sales doubled from a year ago to 283,270 in the first quarter.
Tesla said Sunday it delivered more than 422,000 cars worldwide in the first quarter. The company did not break out figures for China, which typically accounts for well over 20% of Tesla’s revenue.
Shares of Chinese electric-vehicle makers rose Tuesday in Hong Kong, led by Li Auto Inc., after strong December delivery data.
Li Auto’s shares 2015, +10.16%
rose after it posted record-high monthly delivery figures for December last Friday, rounding out 2022 with a 47% increase in deliveries for the year.
The car maker said December deliveries rose 51% from a year earlier, and said it was “the fastest emerging new energy automaker in China to surpass the 20,000 monthly delivery mark.”
Li Auto’s shares were up by as much as 8.4% in early Tuesday trading. The city’s benchmark Hang Seng Index HSI, +1.66%
was last up 0.7%.
Although China’s persistent supply-chain shortages stemming from Covid restrictions slowed production and sales, Chinese electric-vehicle makers capped a wild year with strong delivery results.
NIO Inc. 9866, +2.36%
delivered 122.486 vehicles for 2022, up about 34%, while XPeng Inc.’s 9868, +7.04%
deliveries were 23% higher compared with 2021.
BYD Co. 1211, +4.88%
reported a 150% increase in December sales, despite production being disrupted by the unwinding of COVID-related measures in the final two weeks of the month. Citi analysts said in a note that they consider BYD a key winner of consolidation in the sector, and maintained a buy rating on the stock with a target price of 640 Hong Kong dollars (US$81.98). BYD shares were last up 3.1% at HK$198.4.
Looking ahead, Citi analyst Jeff Chung projects EV sales in China could grow another 33% in 2023.
Shares of Li Auto were last up 8.3% at HK$83.15, while those of XPeng were 5.1% higher at HK$40.3. NIO shares were last 2.6% higher at HK$80.5.
The central China city of Taiyuan saw its GDP grow by 10.9% year-on-year in the first three quarters of 2022. Pictured here is a screen displaying details of a new factory in the city.
Vcg | Visual China Group | Getty Images
BEIJING — The Chinese economy of 2023 almost definitely won’t look like the Chinese economy of 2019.
In the last month, Beijing suddenly ceased many of the lockdown measures and Covid testing requirements that had weighed on economic growth over the last 18 months. Analysts warn of a bumpy road to full reopening, but they now expect China’s economy to bounce back sooner than previously forecast.
The elements underpinning that growth will almost certainly look different than they did three years ago, according to economists.
China’s growth model is moving from one highly dependent on real estate and infrastructure to one in which the so-called digital and green economy play greater roles, analysts at leading Chinese investment bank CICC said in their 2023 outlook released last month. They cited the ruling Chinese Communist Party’s 20th National Congress emphasis on innovation.
The digital economy category includes communication equipment, information transmission and software. Green economy refers to industries that need to invest in order to reduce their carbon emissions — electric power, steel and chemicals, among others.
Over the next five years, cumulative investment into the digital economy is expected to grow more than sevenfold to reach 77.9 trillion yuan ($11.13 trillion), according to CICC estimates.
That surpasses anticipated cumulative investment into real estate, traditional infrastructure or the green economy — making digital the largest of the four categories, the report said.
In 2021 and 2022, real estate was the largest category by investment, the report said. But the CICC analysts said that this year, investment into real estate fell by about 22% from last year, while that into the digital and green sectors grew by about 24% and 14%, respectively.
Beijing cracked down on developers’ high reliance on debt in 2020, contributing to defaults and a plunge in housing sales and investment. Authorities this year have eased many of those financing restrictions.
While much of the world struggled to contain Covid-19 in 2020 and 2021, China’s swift control of the virus helped local factories meet surging global demand for health products and electronics.
Now, demand is dropping. China’s exports started to fall year-on-year in October — for the first time since May 2020, according to Wind Information.
Next year, a reduction in net exports is expected to cut growth by 0.5 percentage points, Goldman Sachs Chief China Economist Hui Shan and a team said in a Dec. 16 note. Net exports had supported China’s GDP growth over the last several years, contributing as much as 1.7 percentage points in 2021, the analysts said.
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But China’s exports to the Association of Southeast Asian Nations have picked up, surpassing those to the U.S. and EU on a monthly basis in November, according to customs data.
“Exports to ASEAN countries may serve as a mild buffer to the pressures in EU and US markets,” Citi’s China economist Xiaowen Jin and a team said in a note Wednesday. They expect ASEAN’s GDP growth to rebound in 2023, while the U.S. and EU spend part of next year in recession.
Jin pointed out that China’s car exports, especially of electric cars and related parts, helped support overall exports this year.
Beijing has pushed hard to increase the development of the national electric car industry. Many brands from Nio to BYD have started to sell passenger cars to Europe and other countries.
“The rapid deceleration in exports also means China needs to tap into domestic markets for growth over the foreseeable future,” said Hao Zhou, chief economist at Guotai Junan Securities in a Dec. 15 note. “With the easing of Covid restrictions, consumption is likely to see meaningful and sustainable recovery from next year.”
He expects retail sales to rise by 6.8% next year, and national GDP to grow by 4.8%.
Central government policy announcements this month have prioritized boosting domestic consumption. Retail sales have lagged overall growth since the pandemic, while a record share of people have preferred to save.
Goldman Sachs analysts raised their 2023 GDP forecast from 4.5% to 5.2% on the economy reopening sooner than expected, with consumption as the main driver.
However, they cautioned that income and consumer confidence will take time to heal, meaning any release next year of “pent-up demand” may be limited outside of a few categories such as international travel.
Spending among poorer Chinese isn’t keeping pace with how much wealthy Chinese are spending — a contrast to greater uniformity between the groups prior to the pandemic, according to a McKinsey survey this year.
That trend has showed up in companies’ financial results.
In the quarter ended Sept. 30, budget-focused Pinduoduo said revenue from merchandise sales plunged by 31% from a year ago to 56.4 million yuan.
Alibaba‘s China commerce revenue, which include apparel sales, declined by 1% year-on-year to 135.43 billion yuan during that time.
Sales of more expensive items favored by the middle class, including electronics and home appliances, rose at JD.com, which said revenue from such products increased by about 6% to 197.03 billion yuan in the three months ended Sept. 30.
Longer term, McKinsey expects millions of urban households to become more affluent, while the number in the lower income category declines.
Tesla CEO Elon Musk attends an opening ceremony for Tesla China-made Model Y program in Shanghai, east China, Jan. 7, 2020.
Ding Ting | Xinhua News Agency | Getty Images
Tesla shares slipped in pre-market trade on Monday after the company cut the price of some of its cars in China.
Shares of the electric carmaker were down around 3% in New York before the market open on Monday.
Tesla slashed the price of its Model 3 and Model Y vehicles in China, one of the company’s most critical markets.
The starting price for the Model 3 sedan was reduced to 265,900 Chinese yuan ($36,615) from 279,900 yuan. The Model Y sports utility vehicle now costs 288,900 yuan versus the previous price of 316,900 yuan.
Elon Musk, the CEO of Tesla, warned in March that his electric car firm is “seeing significant recent inflation pressure in raw materials & logistics.”
The price cuts also come after Musk said he sees elements of a recession in China.
“China is experiencing a recession of sorts” mostly in the property markets, Musk said last week.
However in September, the China Passenger Car Association reported Tesla delivered 83,135 China-made electric vehicles, a monthly record for the company. Tesla has a huge Gigafactory in the Chinese city of Shanghai which it completed upgrades on earlier this year.
Still, the price cuts come in the face of rising competition for Tesla in China from domestic firms such as Warren Buffett-backed BYD as well as upstarts Nio and Xpeng.
Other electric carmakers have hiked prices this year including BYD and Xpeng, as rising raw material costs hit these companies.
The Chinese economy continues to face challenges particularly as strict Covid-19 controls continue to weigh on retail sales. Third-quarter gross domestic product rose 3.9% from a year ago, beating expectations, but remaining below the official target of around 5.5% growth.
