Banking & Finance
China electric cars: Tesla’s missed target draws investors to home-grown EV makers NIO, Xpeng and LiAuto in search of value
NIO and Li Auto will post profit this year, while losses will widen at Xpeng, according to Morgan Stanley
China’s EV start-ups are likely to see sales rise this year, but analysts warn intensifying competition, price cuts could quickly alter the landscape
Topic | Electric cars
Daniel Ren
Daniel Ren
Published: 8:30pm, 1 Feb, 2021
Investor expectations of China’s three leading upstart electric vehicle (EV) makers remain as upbeat as ever despite Tesla’s lower-than-expected quarterly earnings. The outlook for NIO, Xpeng and Li Auto remains positive, with one investment bank expecting two of the start-ups to achieve profitability which could push their shares even higher, spurred by mainland drivers’ rising penchant for green cars, Beijing’s ambitions to become a global leader in electric cars and ample funds flowing into the sector. “Consumers’ changing attitude towards EVs bodes well for the outlook,” said UBS analyst Paul Gong. “Tesla’s locally-built cars convinced more Chinese drivers that EV is a choice, hence bolstering the overall market. The second-generation of Chinese-made EVs, with advantages in cars’ performance and production costs, are worth expecting.” According to a report by Morgan Stanley last week, NIO is likely to post a profit for the first time and double its revenue this year. The investment bank expects the start-up to rake in sales of 33.6 billion yuan (US$5.2 billion), up from an estimated 16.8 billion yuan last year. It also expects a small profit of 6 million yuan, compared to a loss of 4.4 billion yuan in 2020. On Monday, NIO reported a 352.1 per cent rise in January sales, delivering a record 7,225 vehicles.
The bank also expects Li Auto to turn a maiden profit in 2021. A profit of 980 million yuan is forecast compared to an estimated loss of 541 million yuan in 2020, while revenue is expected to jump 92 per cent year on year to 17.96 billion yuan. Xpeng, which is forecast to post a 126 per cent jump in revenue to 13.95 billion yuan this year, would see its losses widen to 4.23 billion yuan, from an estimated 3.56 billion yuan in 2020, the bank said. The Guangzhou-based carmaker said on Monday that deliveries in January jumped 470 per cent from last year to 6,015 vehicles. It sold 3,710 P7 sedans and 2,305 G3 SUVs.
The forecasts for the Chinese start-ups, all of which are listed in New York, coincided with Tesla’s fourth-quarter earnings that fell short of market expectations. The US electric car maker said on Wednesday that its adjusted fourth-quarter profit was valued at 80 US cents a share, missing analysts’ consensus estimate of US$1.03.
Tesla’s lower profit could be attributed to the price cuts, said Ding Haifeng, a consultant with Shanghai-based financial advisory firm Integrity. “It is an ominous sign for Chinese rivals that fiercer competition could dim the outlook and affect their earnings,” he said. “A sound market environment may not necessarily lead to better performance for every player.” Tesla’s results pushed its shares 8.2 per cent lower to US$793.53 on Friday, setting off declines in the shares of New York Stock Exchange-listed Xpeng and NIO. Xpeng shed 3.6 per cent to US$48.18 and NIO eased 0.3 per cent to US$57. Nasdaq-listed Li Auto, however, bucked the trend, advancing 2.2 per cent to US$32.25.
China electric cars: Tesla’s missed target draws investors to home-grown EV makers NIO, Xpeng and LiAuto in search of value
NIO and Li Auto will post profit this year, while losses will widen at Xpeng, according to Morgan Stanley
China’s EV start-ups are likely to see sales rise this year, but analysts warn intensifying competition, price cuts could quickly alter the landscape
Topic | Electric cars
Daniel Ren
Daniel Ren
Published: 8:30pm, 1 Feb, 2021
Investor expectations of China’s three leading upstart electric vehicle (EV) makers remain as upbeat as ever despite Tesla’s lower-than-expected quarterly earnings. The outlook for NIO, Xpeng and Li Auto remains positive, with one investment bank expecting two of the start-ups to achieve profitability which could push their shares even higher, spurred by mainland drivers’ rising penchant for green cars, Beijing’s ambitions to become a global leader in electric cars and ample funds flowing into the sector. “Consumers’ changing attitude towards EVs bodes well for the outlook,” said UBS analyst Paul Gong. “Tesla’s locally-built cars convinced more Chinese drivers that EV is a choice, hence bolstering the overall market. The second-generation of Chinese-made EVs, with advantages in cars’ performance and production costs, are worth expecting.” According to a report by Morgan Stanley last week, NIO is likely to post a profit for the first time and double its revenue this year. The investment bank expects the start-up to rake in sales of 33.6 billion yuan (US$5.2 billion), up from an estimated 16.8 billion yuan last year. It also expects a small profit of 6 million yuan, compared to a loss of 4.4 billion yuan in 2020. On Monday, NIO reported a 352.1 per cent rise in January sales, delivering a record 7,225 vehicles.
The bank also expects Li Auto to turn a maiden profit in 2021. A profit of 980 million yuan is forecast compared to an estimated loss of 541 million yuan in 2020, while revenue is expected to jump 92 per cent year on year to 17.96 billion yuan. Xpeng, which is forecast to post a 126 per cent jump in revenue to 13.95 billion yuan this year, would see its losses widen to 4.23 billion yuan, from an estimated 3.56 billion yuan in 2020, the bank said. The Guangzhou-based carmaker said on Monday that deliveries in January jumped 470 per cent from last year to 6,015 vehicles. It sold 3,710 P7 sedans and 2,305 G3 SUVs.
The forecasts for the Chinese start-ups, all of which are listed in New York, coincided with Tesla’s fourth-quarter earnings that fell short of market expectations. The US electric car maker said on Wednesday that its adjusted fourth-quarter profit was valued at 80 US cents a share, missing analysts’ consensus estimate of US$1.03.
Tesla’s lower profit could be attributed to the price cuts, said Ding Haifeng, a consultant with Shanghai-based financial advisory firm Integrity. “It is an ominous sign for Chinese rivals that fiercer competition could dim the outlook and affect their earnings,” he said. “A sound market environment may not necessarily lead to better performance for every player.” Tesla’s results pushed its shares 8.2 per cent lower to US$793.53 on Friday, setting off declines in the shares of New York Stock Exchange-listed Xpeng and NIO. Xpeng shed 3.6 per cent to US$48.18 and NIO eased 0.3 per cent to US$57. Nasdaq-listed Li Auto, however, bucked the trend, advancing 2.2 per cent to US$32.25.
