China EV war: Tesla demand fuels ‘home run’ quarter as NIO, Xpeng step up rivalry with five-fold surge in deliveries

Tesla delivered 184,800 cars worldwide in the first quarter, beating market estimate; firm does not break down sales by country or geography
Challengers NIO and Xpeng both recorded a five-fold surge in deliveries as Chinese consumers embraced EVs amid state-driven incentives

Electric & new energy vehicles

Bloomberg

Published: 10:03am, 5 Apr, 2021

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Tesla’s market-smashing deliveries of electric vehicles (EVs) in the first quarter suggest Chief Executive Elon Musk’s bet on growth in China and Europe is starting to pay off.

The results marked a strong start to a year in which Musk is counting on global operations to help scale-up production and sales. Tesla delivered 184,800 cars worldwide in the first quarter, exceeding the 169,850 average estimate in a Bloomberg survey of analysts. It represents an increase of about 4,000 vehicles over the preceding quarter.

The latest quarter was “a massive home run in the eyes of the bulls,” Dan Ives at Wedbush wrote in a research note Friday. “We believe China and Europe were particularly robust this quarter as the trajectory now puts Musk & Co to exceed 850k for the year, which is well ahead of whisper expectations.”

01:20

Tesla starts delivery of made-in-China cars

Musk is pushing into China, the world’s largest automotive market including for EVs, to gain a foothold amid competition from local EV start-ups as well as Volkswagen. Auto sales are forecast to rise in the Asian nation this year for the first time since 2017. The government in March said it will help boost the number of EV charging stations and battery-swapping facilities.

Tesla is not the only carmaker to report robust delivery last quarter. Its main Chinese rivals NIO and Xpeng both recorded a five-fold surge in sales in the first quarter of 20,060 and 13,340 units respectively, as smart electric vehicles increasingly hit the mark with mainland motorists.

Tesla’s volume stands apart from most other carmakers, who mainly are showing declines in part because of electronic-chip constraints, analysts at Jefferies said in a research note. “Shares should respond well to the Q1 delivery data.”

00:47

Vehicle number 10,000 rolls off the assembly line for Chinese electric carmaker XPeng

After a remarkable run in 2020 that saw its stock price surge by more than 700 per cent, Tesla’s shares fell roughly 6 per cent this year through April 1.

“It’s been a brutal sell-off for Tesla and EVs, but we believe that will now be in the rear view mirror,” wrote Ives, who maintained a “neutral” rating on the shares.

Tesla recently refreshed the Model S sedan and the X, an SUV. No Model S and X vehicles were made in the quarter, and only 2,000 were delivered in total. In China, Tesla started accepting booking for Model Y, its Made-in-Shanghai SUV, at the start of the year with a 30 per cent price markdown.

“We are encouraged by the strong reception of the Model Y in China and are quickly progressing to full production capacity,” Tesla said in a statement. The new Model S and Model X have also been “exceptionally well-received,” it said, adding that it is in the early stages of ramping production.

Tesla currently makes the Model S and X only at its factory in Fremont, California, and the smaller Model 3 and Y both there and at its plant in Shanghai. It plans to build two more factories this year, one in Texas and another near Berlin. The company does not break out sales by geography, but the US and China are its largest markets and nearly all the sales were of the Model 3 and Y.

With production at the Fremont factory temporarily shutting in February over parts supply issues, Tesla’s higher-margin Shanghai plant will account for a bigger share of volume in the quarter, which should support profitability, Jefferies said in the note.

Chief Financial Officer Zachary Kirkhorn warned in January that production would be low due to the transition to the revamped products, while the global semiconductor shortage and delays at ports were also expected to weigh on the quarter.

Tesla said its delivery count should be viewed as slightly conservative and final numbers could vary by as much as 0.5 per cent or more.

The quarterly delivery figure is widely seen as a barometer of demand for both Tesla’s vehicles and consumer interest in electric vehicles worldwide as legacy carmakers roll out electric cars of their own.

Additional reporting by SCMP Reporter

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