Chinese EV stocks tank after Tesla earnings disappoint
Shares of Chinese EV-makers were battered on Thursday after Tesla (NASDAQ: TSLA) reported disappointing third-quarter results on Wednesday where the company missed estimates.
It was the first time Tesla, co-founded by Elon Musk, missed on both earnings and revenue since second-quarter 2019.
On Thursday morning, Hong Kong-listed shares of Chinese EV makers BYD and Xpeng fell 2.18% and 8.76% respectively. Li Auto slid 3.14%, while Nio (NYSE: NIO) and Geely dropped 8.36% and 3.97% respectively in Hong Kong.
During Tesla’s earnings call Wednesday, Musk cautioned that the Tesla Cybertruck – its battery electric full-size pickup truck model – would not deliver significant positive cashflow for 12 to 18 months after production begins.
Musk said the company is working to bring down the prices of its cars amid high-interest rates, but it is as challenging as “Game of Thrones, but pennies.”
“I’m worried about the high-interest rate environment we’re in,” he said, adding that it will be much harder for consumers to purchase cars if interest rates were to increase further.
Tesla shares closed 4.78% lower on Wednesday. Other U.S.-based EV rivals Lucid and Rivian fell more than 9% on the same day. Lucid’s stock dived a day earlier after it reported third-quarter EV deliveries that disappointed the Street.
In the first six months of the year, BYD was the world’s top EV manufacturer, contributing 21% of global sales of EVs, according to research firm Canalys. Tesla trailed behind at second place with 15% market share while German carmaker Volkswagen held 7% market share in third place.
EV players are under pressure from a price war to gain market share amid intense competition.
Tesla conducted multiple rounds of price cuts over the last few months, especially in China – the world’s biggest EV market. Domestic rivals BYD, Nio, Li Auto, and Xpeng have also joined Tesla in lowering the starting prices for some of their EV models.
Source: https://www.cnbc.com/2023/10/19/chinese-ev-stocks-fall-after-teslas-disappointing-q3-results.html