Xpeng, Li Auto and Nio report woeful August sales as Chinese EV makers face weakening demand for big-ticket items
- Xpeng and Li Auto reported fewer deliveries month on month in August, while Nio reported a 6 per cent increase in sales
- Buyers are having second thoughts about making big purchases amid an uncertain economy, says market observer
The three top Chinese smart electric vehicle (EV) makers reported lacklustre sales in August, sparking fears that consumers are putting off big-ticket purchases because of a slowing economy.
“The sales of the three companies failed to live up to expectations,” said Chen Jinzhu, chief executive of Shanghai Mingliang Auto Service, a consultancy firm. “Some potential buyers [of their vehicles] might have changed their minds due to worries about job prospects.”
But Chen said that some of the customers who placed orders for the smart EVs, which come with premium features such as preliminary autonomous driving technology, could have reneged on their purchases.
China’s zero-Covid strategy that aims to contain the highly transmissible Omicron variant through stringent virus control measures, such as lockdowns and mass testing, has badly affected the manufacturing sector and service providers across the mainland, which is deterring consumers from spending on expensive items.
In their second-quarter earnings reports, both Xpeng and Li Auto said they expected to deliver fewer vehicles between July and September.
Guangzhou-based Xpeng estimated total deliveries of 29,000 to 31,000 units in the third quarter, below analysts’ consensus forecast of 36,000 units.
Beijing-headquartered Li Auto said it could deliver 29,000 to 31,000 EVs between July and September, falling short of a forecast of 35,000-37,000 units made by Deutsche Bank.
Shanghai-based Nio is yet to publish its second-quarter earnings.
It is widely expected that sales of battery-powered vehicles will jump in the remaining four months of the year because China is set to scrap cash subsidies for EV buyers from 2023.
But most vehicles assembled by the trio are priced above 300,000 yuan (US$43,480), making them ineligible for subsidies.
Facing a sharp sales drop, Li Auto president Kevin Shen said the company was pinning its hope on new models to regain lost ground.
“We are preparing for the launch of Li L8 in early November, with delivery beginning the same month,” he said in a statement on Thursday. The model will be available in two variants, a six-seater and a five-seater, to cater to diverse family groups.
Li Auto also unveiled the L9 on June 21, the company’s second production model after the Li One sport-utility vehicle, which amassed 30,000 pre-orders within three days of its launch.