To The Moon

Fierce competition for EVs

$XPeng Inc.(XPEV)$ 

Global EV sales for year 2022 is around 10 million units (up ~60% vs 6.5 million units in year 2021). Although the global EV sales is expected to grow to ~13.6 million units in year 2023 (which presents a growth of ~30% yoy), one must admit that there's huge competition among the different EV brands.

$BYD COMPANY(01211)$ became the world's best selling EV brand in year 2022, recording a sales of ~1.8 million units. Followed by $Tesla Motors(TSLA)$ , which also recorded ~1.3 million units in year 2022. Furthermore, the competition is getting more intense with $Volkswagen AG(VLKAF)$ etc.

Although China has the biggest market for EVs at ~60%, there's price war among the different EVs and you can see that most of the China's EV companies are not making significant progress in their car deliveries. Taking XPeng as an example, since hitting the peak of 16k car deliveries in Dec 2021, the number has been decreasing and mostly remained stagnant at around 10k.

For Q3 & Q4 22, Xpeng delivered

Jul22 - 11,524 cars

Aug22 - 9,578 cars

Sep22 - 8,468 cars

Oct22 - 5,101 cars

Nov22 - 5,811 cars

Dec22 - 11,292 cars

Jan23 - 5,218 cars

Clearly, it's a challenging to scale up the car deliveries exponentially. Since the peak deliveries of 16k in Dec 2021, the monthly car delivery is on a downtrend. **Do keep a lookout for the numbers in Feb 2023, to see if the downtrend continues**

Furthermore, the competition in the EV market has intensified as numerous traditional car markers (Mercedes-Benz, BMW etc) are also investing and building more EV units. Hence, I think the downside will be more for China EV companies (such as XPeng, Nio and Li Auto). Although the price of raw material for EV battery (lithium) has been started to decline since the peak in Nov 202w, it is still up ~60+% yoy. The price war with Telsa would also lead to lower profit margin! With increasing interest rate hikes, I doubt people would be splashing more money to buy new cars!!

The outlook for $XPeng Inc.(XPEV)$ Q4 delivery is only at 20k. It's insignificant as compared to Tesla's 500+k per quarter and Ford's 150+k EV per quarter.

Some may argue that the worst is over, but do remember that Elon Musk has been cashing out from his Tesla positions at $200+ while Warren Buffett has been trimming his stake in BYD recently!! What do you think? Let me know your thoughts!

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