Tesla vs China brand like Xpeng Etc 

Each year, the competition in electric vehicles (EVs) intensify further as more brands actively vie for dominance. China is the biggest EV market in the world and it is important to see how the brands are performing in this market.

To simplify the process of comparison, our attention will be directed exclusively towards companies engaged in the production of EVs or hybrids. Although significant numbers of EVs/hybrids are sold by companies like Volkswagen and Geely, they are excluded due to their offering of gasoline cars as well.

The purpose of this assessment is to periodically take stock and identify the leaders in the race, while also pinpointing the laggards. The ultimate goal is to facilitate investment decisions by avoiding underperforming companies.

It is pretty clear that BYD and Tesla are the top two EV companies currently. There're always argument that BYD encompasses both pure EVs and hybrids, while Tesla only produces pure EVs. That is true, but even if we counted pure EVs for BYD, it was 264,647 units or up 87% year-on-year. So its pure EV growth rate remains high.

In contrast, Tesla experienced a slower growth rate of 5% in terms of sales in China. One potential explanation for this could be that Tesla's models are relatively older compared to other brands. Despite this, Tesla remains a highly regarded and popular brand in China, competing fiercely with BYD for the leading position.

Smaller players in the EV market, specifically Xpeng and Leapmotor, are facing a concerning situation as their sales have declined. This is an unfavorable development considering the rapid growth in EV demand, and other competitors have demonstrated the potential for nearly 100% revenue growth compared to the previous year. The argument of an economic slowdown and reduced spending propensity among the Chinese population cannot be considered a valid excuse since other competitors have managed to achieve successful sales.

Furthermore, the revenue of Xpeng and Leapmotor is significantly lower than that of the top two players. Considering their smaller revenue base, a significant increase in the range of 300-400% would be expected for them to stay competitive. However, the fact that their revenue has declined is a serious concern. This suggests that Xpeng and Leapmotor may be falling behind and risk being left out of the competition at this early stage of the EV transition phase.

Over the past few years, Xpeng, along with Nio and Li Auto, emerged as popular startup stocks in the Chinese EV market. Among the three, Li Auto has showcased the strongest performance, with its latest quarter revenue nearly doubling that of Nio and five times that of Xpeng. This represents a significant shift in fortunes, considering that just a year ago in 1Q2022, Xpeng had delivered 34,561 units, surpassing Nio's 25,768 units and Li's 31,716 units. However, Xpeng has now fallen behind its fellow startup competitors.

Notably, Xpeng's deliveries have experienced a consistent decline over consecutive quarters. This is undoubtedly a cause for concern, as if this downward trend persists, the company will exhaust its cash reserves at a faster rate, amplifying the financial challenges it currently faces.