A Slow September Start Frustrates EV Investor Confidence in China By Investing.com

By Michael Elkins 

Weak seasonality, along with sporadic COVID lockdowns hampered Chinese electric vehicle sales in early September. According to a Morgan Stanley analyst, “with already suppressed market sentiment, it would take a significant sales uptick to restore investor confidence in the auto segment.”

A soft start to September was anticipated due to the Mid-Autumn Festival and several city-wide lockdowns. However, a 10% WoW decline in the EV run-rate was still a surprise compared to a low-single-digit sequential decline during the holidays last year. A fresh wave of COVID containment measures hit Sichuan and Guizhou following the latest outbreak in the area.

On the bright side, the weekly EV run-rate still managed to grow 12% MoM, compared to -4% MoM in the overall auto industry, lifting spot EV penetration to 30%.

Li Auto (NASDAQ:) continues to ramp up L9 production as continued supply constraints and power rationing in Sichuan slows the pace to slightly behind market expectations. The L9 accumulated sales MTD only reached ~20% of the company’s target to ship 10k L9 units in September.

NIO’s (NYSE:) weekly run-rate also declined, to 1.6k, the lowest level since mid-May, likely dragged by a lingering component supply shortage for ES6 and ET7. Xpeng’s (NYSE:) weekly sales remained largely steady, at 1.8k

Following a production upgrade, Tesla’s (NASDAQ:) domestic deliveries continue to rise. Current shipment reached a record high, at 18.2k units per week. The analyst wrote in a note, “We look for momentum to accelerate in coming weeks, with likely another record month, driving overall EV volume in China. With shortening waiting time amid output upgrade, the market is keeping a close watch over a potential price cut into the peak season.”

Vertical integration gave BYD (OTC:) better control over parts supply, allowing the company to sustain a weekly run rate of 30k during the week, despite an 8% sequential slowdown. Sales were still largely in-line with the same period in July.