Nio Stock, XPeng Need A Win. Will Their New EVs Drive Turnaround?
Nio (NIO) and XPeng (XPEV) are banking on upcoming new electric vehicles to revive their EV sales, with key events due Wednesday. XPeng reported a wider-than-expected first-quarter loss, with a big delivery event for Nio today.
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New Nio ES6 SUV Fastest To Ramp
China EV startup Nio is set to launch an upgraded ES6 SUV on Wednesday, with deliveries starting the next day.
The ES6 will be the startup's fastest model from launch to delivery. Nio is trying to catch up with startup rival Li Auto (LI), which has won praise on Wall Street for superior execution, including deliveries, in the competitive China EV market.
Nio's ES6 first launched in 2019 and has been a key contributor to its EV sales. Last Friday, the EV maker began deliveries of an updated ET7 luxury sedan as well.
XPeng's Big Loss
On Wednesday, startup rival XPeng reported results for the first quarter.
XPeng lost 37 cents a share, worse than expected and widening from a year earlier. Revenue plunged 46% vs. a year earlier to $587.31 million, far below views.
The EV maker sees Q2 deliveries of 21,000-22,000, down 36%-39% vs. a year earlier though up from Q1's 18,230.
New G6 SUV To Drive XPeng Turnaround?
XPeng's earnings report may matter less than any updates on the upcoming G6 SUV.
XPeng is supposed to start deliveries of the new G6 by end of the current quarter, with the first models coming off the production line this week.
Deutsche Bank analyst Edison Yu believes the G6 could revive XPeng's fortunes in the second half of 2023.
Nio's EV sales fell 35.9% in April from March, while XPeng's sales were up a modest 1.1%, continuing a soft patch.
Their Q1 deliveries, especially XPeng's, far trailed those of rival Li Auto, whose new L7 SUV is seeing early success. Li Auto also is profitable, in contrast to Nio and XPeng.
Nio Stock, China EV Stocks
Shares of Nio sank 2.2% to 8.56 before the open on the stock market today. Nio stock had recently retaken the 50-day line for the first time since mid April. It remains far below the 200-day average.
XPEV stock lost 5.6% early Wednesday, both the 50-day and 200-day lines. LI stock shed 1.2%. It remains above key averages after topping a double-bottom buy point May 10.
New Electric SUVs Challenge Model Y
Deliveries of the new G6 SUV won't start to make a difference before the third quarter.
The G6 could mark a return to relevance for the embattled startup, Yu said in a note to clients May 17.
"Our view is XPeng will price G6 below Model Y in hopes of attracting consumers with its sleeker design and newer interior," Yu wrote.
Nio's ES6 SUV and Li Auto's L7 SUV are also sometimes seen as rivals to the Model Y, a bestselling EV in China.
This year, Tesla (TSLA) cut prices of the Model 3 and Model Y in China and globally.
Those cuts helped fuel Model Y sales while triggering a price war. The Chinese EV startups, as well as Chinese EV giant BYD (BYDDF), responded with tit-for-tat cuts.
TSLA stock slipped 1.3% early Wednesday to 183.39, after ending a five-session win streak on Tuesday. It's moving toward a 207.89 buy point.
BYD stock is not yet trading Wednesday. On Tuesday, shares shed 2.2%, but is in buy range from a cup-with-handle breakout in May.
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Source: Investor's Business Daily
