Nio, Li Auto, XPeng, BYD Stocks Plunge as China EV Headwinds Rise

Top Chinese electric vehicle (EV) stocks have tumbled this year, erasing billions of dollars in value as the industry faces substantial headwinds. Nio (NYSE:NIO) fell to $3.58, nearly 50% below its April high. 

Top EV Stocks Have Tumbled This Year

XPeng (NYSE:XPEV) dropped to $9.90, down 55% from its year-to-date high. Li Auto (NASDAQ:LI) slid to $11.54 from a peak of $20, while BYD has lost 33%. Other top EV makers such as Polestar, Leapmotor, Xiaomi, and Chery have all fallen by double digits.

Chinese EV stocks have dropped as the industry faces substantial challenges after Beijing started to end its subsidies. Officials omitted EVs from their list of strategic industries in their five-year development plan for the first time in over a decade. 

Officials did that because they believe that the industry is mature and that it does not require subsidies as it did in the past. Also, they believe that ending subsidies will help to end the significant oversupply and a price war among top manufacturers. 

Most Chinese EV companies are now prioritizing sales outside China, with countries in South America, Southeast Asia, and Europe seeing strong growth. For example, recent data shows that Chinese electric car sales have jumped to a record high in Europe, driven by strong demand and low tariffs. 

This growth, however, will be put to the test as the European Union considers measures to protect local industries. Latest reporting shows that EU may limit the number of Chinese EVs shipped to the bloc by up to 50%. Such a move would have an impact on these companies as Europe is one of their most lucrative markets. 

The companies are also facing cost pressures as the US-Iran war continues. BYD, the biggest company in the industry, said that fierce competition, rising costs for commodities, and raw materials were squeezing its margins.

Chinese EV Deliveries are Slowing

Top Chinese EV companies reported weak delivery numbers for September. Nio said its deliveries rose 7.7% year on year to 37,408, its slowest growth this year and down from 14.5% in August. 

XPeng, by contrast, delivered 41,256 vehicles, slightly below the 41,581 it delivered in September last year. Li Auto’s deliveries also declined to 31,817 from 33,951 a year earlier. This weakness may continue in the near term as the Chinese economy slows.

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