Key Takeaways from Chinese EV Companies’ August Deliveries

Chinese EV companies have released their delivery reports for August. Here are the key takeaways from the release.

Li Auto (NYSE: LI) delivered 34,914 vehicles in August which was 663.8% higher than the corresponding quarter last year. It is the third consecutive month when the company’s deliveries were in excess of 30,000. Its total deliveries in 2023 have reached 208,165 while the cumulative deliveries now stand at 465,499.

The company has outperformed EV peers NIO (NYSE: NIO) and Xpeng Motors (NYSE: XPEV) with its cumulative deliveries now well ahead of both of them and the gap only widening with every passing month.

Key takeaways from Chinese EV companies’ August deliveries

In his prepared remarks, Li Auto’s CEO Xiang Li said, “As increasing family users recognize and trust our products, we delivered robust performance in August, with monthly deliveries for each of Li L7, Li L8, and Li L9 surpassing 10,000 vehicles.”

He added, “The popularity of these three Li L series models has solidified our sales leadership position in both China’s NEV and premium vehicle markets. From January to August this year, we captured an over 30% market share in the RMB300,000 and higher NEV market in China, winning the premium NEV sales champion title. Furthermore, we have held the top sales spot among high-end ICE and new energy SUVs priced above RMB300,000 in China for five straight months since April this year.”

Li Auto expects to deliver between 100,000-103,000 EVs in the third quarter and after the stellar performance in July and August, it looks well on track to meet or exceed its guidance.

Notably, while all other EV companies are struggling with losses and Xpeng Motors posted negative gross margins in the second quarter, Li Auto posted healthy gross margins of 21.8%. Its net income of $319 million and $1.33 billion in free cash flows were also encouraging.

Xpeng Motors reported a rise in its EV deliveries

Xpeng Motors delivered 13,690 EVs in August which was 24% higher than July. Specifically, the deliveries of its newest model the G6 SUV were in excess of 7,000 in the month. In its release, XPEV said, “The G6 has realized a significant ramp-up in production output, owing to the Company’s considerable preparation and high efficiencies across its supply chain, as well as its manufacturing and delivery capabilities. Notably, G6 deliveries surpassed the 10,000 mark in only 45 days following its delivery start date.”

Xpeng Motors’ cumulative EV deliveries were 317,211 at the end of August. The company is banking on its G6 SUV and the partnerships with Volkswagen and Didi to revive its fortunes.

XPEV has partnered with Didi

Last month, Xpeng Motors announced a $744 million deal with Chinese ride-hailing app Didi which would take a 3.25% stake in Xpeng in exchange for its electric vehicle (EV) and autonomous driving assets.

As part of the agreement, Xpeng would launch a new EV brand developed under the project name “MONA” and would produce vehicles in the mass market RMB150,000 price range.

Previously, in July, Volkswagen partnered with Xpeng Motors to build two EVs on its platform and also buy a stake in the company for a total consideration of $700 million. The deal was a pathbreaker for not only XPEV but also the Chinese EV ecosystem as it reflected the confidence of the German auto giant in a startup EV company.

Xpeng Motors expects the deal with Volkswagen to also help improve its margins. It reported a gross margin of -3.9% in the quarter as compared to 1.7% in Q1 2023 and 10.9% in Q2 2022. The company’s vehicle margin was -8.6% in Q2 2023 as compared to -2.5% in Q1 2023 and 9.1% in Q2 2022.

The company expects its gross margins to improve over time and said that increasing volumes would help its margins to improve in Q4. It added that “as we sell a better mix of products in the second half, we do expect our gross margin to become positive in the fourth quarter of this year.”

NIO reported a YoY increase in deliveries

NIO delivered 19,329 EVs in August and while the metric rose 81% YoY it was lower than the record deliveries of 20,462 in July. The Chinese EV company has delivered 94,352 vehicles so far in 2023 and its cumulative deliveries have risen to 383,908.

Notably, the combined monthly EV deliveries of NIO, Xpeng Motors, and Li Auto hit a new record last month. However, as has been the case over the last many months, it was LI that has led the pack.

BYD reported a rise in deliveries

BYD delivered 274,386 vehicles in August which was 57% higher YoY and a new record for the company. Notably, along with battery electric vehicles (BEVs), BYD also sells plug-in hybrids (PHEVs). However, while historically its PHEV deliveries have been higher than BEVs, in August it sold more BEVs than PHEVs helped by strong growth in its low-priced Seagull car.

The company is already the biggest seller of new energy vehicles (NEVs) globally and dislodged Tesla from the position in 2022. However, the Elon Musk-run company expects to produce 1.8 million EVs in 2023 and still holds the crown as the largest EV company.

Musk praised BYD

In May, Musk praised BYD and termed it “highly competitive.” In 2011, the billionaire had laughed at the possibility of BYD as a competitor to Tesla.

Musk has praised Chinese EV companies previously as well. During Tesla’s Q4 2022 earnings call earlier this year, Musk said, “we have a lot of respect for the car companies in China. They are the most competitive in the world. That is our experience.”

He added, “They work the hardest and they work the smartest. And so, if I were to guess, probably some company out of China is the most likely to be second to Tesla.”

Previously the billionaire praised Chinese workers for burning the 3 a.m. oil” while criticizing American workers for “trying to avoid going to work at all.”

Chinese EV companies – especially BYD are giving a tough fight to Tesla. However, when it comes to profitability Tesla boasts of high margins despite the multiple price cuts.