To The Moon

U.S. Chinese EV players Nio$NIO Inc.(NIO)$ $NIO Inc.(NIO.SI)$ $NIO-SW(09866)$ ,Xpeng$XPeng Inc.(XPEV)$ , and Li Auto$Li Auto(LI)$ posted strong delivery numbers for the month of June, as production and demand for their electric vehicles recovered strongly from the Covid-19-related lockdowns in China.

Xpeng fared the best of the three players, reporting 15,295 deliveries, marking an increase of 51% compared to May, and up 133% versus last year. Li Auto delivered about 13,024 vehicles in June, up 13% versus May and up 69% versus last year. Nio delivered about 12,961 vehicles in June, up 85% from May and up by almost 60% versus last year. Put together, the three companies delivered about 41,280 vehicles in June marking their best month on record. So, what’s the outlook like for these companies?

Now, the three stocks have had a mixed performance this year. While Nio and Xpeng stock are down by over 35% year-to-date, Li Auto has outperformed, with its stock up 17% this year so far. However, things are likely to get better from here for a couple of reasons.

Firstly, overall EV demand and favorable regulation in China remain a big tailwind for Chinese EV players. Between January and May 2022, deliveries of new energy vehicles in China exceeded 2 million units, marking an increase of over 2x versus last year.

Separately, the companies also have new products in the offing, which could help to drive sales further. For example, Li Auto has commenced deliveries of its flagship LI9 SUV, while Nio is preparing to launch its ET5 sedan and premium ES7 SUV. Xpeng is also expected to launch its flagship G9 SUV in September.

Separately, the semiconductor shortage, which crippled automotive production for almost two years, is also showing signs of easing, as global growth slows and demand from the technology industry cools. This could also help Chinese EV players boost the production of their vehicles, which typically have a very high semiconductor content.