This bad EV news could hit Nio, XPeng, Li Auto, BYD stocks

By:
on Apr 9, 2024
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  • Chinese EV sales growth slowed in the first quarter.
  • European ports are being flooded with thousands of Chinese EVs.
  • The implication is that Chinese EVs companies will have thin margins.

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Red flags in the electric vehicle (EV) industry are still flashing everywhere. Most EV stocks have plunged, with Tesla (TSLA) erasing over 30% of its value this year. Other popular companies like Lucid Motors, Rivian, and Mullen Automotive have also plunged.

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Chinese EVs influx in European ports

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Chinese EV stocks have not been left behind. Nio stock price is down by over 51% in 2024 while XPeng and Li Auto have plunged by over 49% and 16%. BYD has fallen by 6.2%. These declines of EV stocks have erased over $1 trillion of value in the past few years.

Nio vs XPeng vs Li Auto vs BYD

Nio vs XPeng vs Li Auto vs BYD

Now, a new report by the Financial Times points to more woes in the industry. The paper noted that an influx of Chinese EVs has turned EU ports into ‘car parks’. Some vehicles have remained in these ports for up to 18 months.

This trend is happening because of a strong slowdown in Chinese EV sales in Europe and logistics challenges. In a statement, a boss at the Zeebrugge port, Europe’s busiest car import port, noted that many distributors were using car parks as their depots instead of sending them to dealers.

This is a major issue for Chinese companies like Nio, XPeng, Li Auto, and BYD, which are battling a saturated home market. As a result, these firms believe that Europe is a natural market to expand to because of its focus on clean energy. 

Weak demand in Europe and China

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Most of these companies have also seen the success of Tesla in key markets like Norway, Germany, Spain, and the UK. However, these companies are facing the European market hard to navigate as most buyers still prefer European brands. 

Weakness in Europe will likely affect these Chinese EVs because of the ongoing slowdown in their home country. The most recent data by the China Passenger Car Association showed that battery-powered EV sales rose by 14.7% in January-March, the slowest rate since Q2’23.

All this is happening at a time when all these companies are preparing measures to ramp up vehicle production. BYD expects to deliver 3.6% vehicles this year, a 20% increase from 2024.

Similarly, Li Auto hopes to deliver 800k vehicles this year while XPeng and Nio will deliver 280k and 230k units, respectively. XPeng delivered 141,601 units in 2023 while Nio delivered 160k vehicles.

Newer companies are also coming to the market. Xiaomi, the smartphone heavyweight, has started selling EVs. Altogether, analysts expect that China will manufacture over 13 million vehicles this year.

The implication of all this is that EV companies will need to slash prices in a bid to boost sales, a move that will drive their thin margins lower.

Electric Vehicle (EV) Manufacturing Stock Market