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Waiting for EV Seasonal Demand; Morgan Stanley Says September is Crunch Time

Stock Markets Sep 06, 2022 11:54
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By Michael Elkins

China's EV market registered steady sales despite power rationing and a fresh round of Covid lockdowns. Entering September, China's weekly EV run rate is hovering at around 120k units. That's up 24% MoM but largely flat WoW after the month-end sales push in August.

Even as China’s EV numbers track slightly behind the seasonal norm into early September, a Morgan Stanley analyst believes that it is still too early to say there's no meaningful seasonality this year.

Both Nio Inc (NYSE:NIO) and Li Auto Inc's (NASDAQ:LI) weekly sell-through improved sequentially in early September. NIO registered 2.9k units of sales during the week, continuing to lead both Li Auto and XPeng in terms of volume. The company’s shipments of ET7 and EC6 have been slowed by lingering supply bottlenecks. However, sequential growth in ES6 and ES7 partly offset the difficulty.

Li Auto's weekly run-rate finally regained the 1.5k mark, within which L9 jumped to 724 units in the week. It's worth noting that some L9 previously scheduled for August delivery have now carried over into September.

On the other hand, Xpeng Inc 's (NYSE:XPEV) weekly run rate decelerated sequentially to 1.8k over the past week. According to the analyst, recent checks suggest a sequential slowdown in foot traffic and order intake at XPeng's major flagship stores. But he believes that things should start to pick up with test drives for G9 starting in September.

Momentum is expected to accelerate for Tesla (NASDAQ:TSLA) this month. Especially after the company’s production upgrades this summer. The analyst says that the company is likely to achieve record shipment levels in September. He said of Tesla, “With waiting time for model Y shortening to less than a month, the market is mindful of whether the company would lower the prices in China towards the peak season.”

BYD's (OTC:BYDDY) weekly run rate of 33k is behind its peak level of late August. However, sales still came in 11% above the same period in July.

Waiting for EV Seasonal Demand; Morgan Stanley Says September is Crunch Time
 

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