The deaths of two people after a test vehicle drove off the third floor of a Shanghai building was always going to be bad news for a company in the run-up to one of the most important moments in its history. But Chinese electric vehicle (EV) manufacturer NIO then ran into heavy criticism for putting out a statement that seemed keener on denying technical problems with the car than showing concern for the two fatalities.
“The cold blood of capitalism,” one social media user acidly remarked, before NIO posted a revised statement on the accident that put the line ‘not caused by the vehicle’ in brackets in a bid to de-emphasise it.
However, last week’s tragedy was not the only bad news NIO’s management has had to deal with. NIO’s stocks took a dive on Wednesday after the short-seller Grizzly Research claimed that NIO “[juiced] its number to inflate revenue”. The company’s shares plunged in Singapore, New York and Hong Kong, wiping out $6.1 billion in the value of the company.
Since early May the leading Chinese EV makers had all been enjoying an equities market bounce, far outperforming the wider indices. Li Auto’s Nasdaq-listed share price has more than doubled between early May and late June, for example.
The EV brands gained momentum, as they emerged from a difficult first quarter that was dominated by Covid-19 lockdowns and component shortages. Production output picked up again, new models rolling out of the factory door.
However, this progress paused this week, as automotive stocks dropped on Wednesday. Li Auto, for example, fell 8.8% on Wednesday, while XPENG lost 7.4%.
As manufacturers, the newer EV firms are progressing beyond proving that they can design and sell cars at premium prices. The challenge now is to fill out their product ranges and ramp up output. In this context, NIO is embarking on the most important product cycle in its history, analysts say, as it upgrades its three existing SUV models and launches another one in August, as well as a new sedan in September.
The focus now for all the challenger brands is the sales report. XPENG has guided for 31,000 to 41,000 unit sales for the second quarter, while NIO is targeting 23,000 to 25,000. Li Auto hopes to hit 10,000 a month by the end of the year, following the launch of its new flagship SUV, the L9.
In the last week another of the electric vehicle start-ups has also listed on Nasdaq: Polestar, which raised $890 million. The high-end marque is 48% owned by Volvo Car, which is, in turn, 84% owned by Zhejiang Geely. However, the Chinese media are not impressed with its sales in the local market: only 365 vehicles in 2020 and 2,083 vehicles in 2021.
36Kr sums up much of the mood when it says that Polestar failed to “seize a once-in-a-lifetime opportunity” to overtake the other start-ups when it was launched in China back in 2017. Jiemian.com seems to agree, claiming that Polestar has spent more time introducing new Chinese CEOs (four in as many years) than debuting new models. The view is that Polestar’s sales should be much more advanced because of its heavyweight backing from Volvo. A brand that was born “with a golden spoon” like this should have been challenging Tesla, 36Kr reckons.
The news website thinks it has an explanation for Polestar’s slow start, however: it doesn’t understand the domestic market well enough because the company’s corporate HQ is in Sweden and its global R&D team is based in the UK. “Foreign monks can’t recite sutras,” it scoffs.
But as Sina Finance points out, Polestar has always chosen a different path in targeting sales in international markets. Whether that’s the right strategy – given China’s dominance of international EV sales – is an altogether different question, however. After selling 13,600 vehicles globally during the first four months of 2022, Polestar is some way back on China’s leading EV contenders. But it is scaling up its commercial effort quickly, achieving almost half of last year’s sales in the space of four months in 2022. It now has a target for 65,000 units by year-end and 290,000 by 2025. It intends to achieve this by moving into more markets, introducing new models and delivering on a contract to supply Hertz with 65,000 vehicles over the next five years.
“Rock-on Polestar… even if you are a Swedish-Chinese lovechild,” one netizen encouraged.
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