Chinese automakers mostly saw a return to their growth trajectory in electric vehicle sales in February after taking measures to ride out a seasonal lull worsened by Beijing’s phase-out of EV purchase subsidies.
BYD, GAC’s Aion, and Nio saw strong recoveries, while Xpeng and Huawei-backed Aito continue to fall behind in the competition. However, sales are still down from the historic highs of the past year, and a tougher competitive environment could create more headwinds in the near term, according to executives.
Why it matters: The figures come as many automakers have said they face increasing pressure from competitors just as operation costs mount.
- Li Auto chief executive Li Xiang told Chinese reporters on Thursday that the lingering impact of the end of EV subsidies and recent price cuts by bigger rivals will continue to weigh on sales in the first quarter.
- Nio also anticipates more pressure on its margins as the company currently undergoes “a transitional period,” CEO William Li told investors on Wednesday, adding that it was clearing out inventory of its older vehicles in preparation for the release of new models in the second quarter.
Strong recovery: BYD has continued its growth momentum in customer demand despite a slowdown in the overall Chinese EV market, reporting delivery of 193,655 vehicles in February, a jump of 119.4% from a year earlier and an increase of 28% from the previous month.
- BYD has retained its dominant position, especially in the price segment of RMB 100,000 to RMB 250,000 ($14,478 to $36,196), according to Sun Shaojun, founder of auto consumer service platform Che Fans.
- GAC’s EV unit Aion also saw a big revival, with sales almost tripling to 30,086 units from a month ago. Sun said Aion was among the few rivals to BYD that “can catch up a little bit in certain regions and car segments.” (our translation)
Back to normalcy: Li Auto’s February sales grew 97.5% year-on-year to 16,620 units, representing a mild increase of 9.8% from a month earlier. Nio and Hozon posted double-digit growth from a month ago with 12,157 and 10,073 vehicle deliveries, respectively.
- Hozon began offering a de-facto price cut on Feb. 3, as customers who placed an order for its Nezha S electric sedan with a deposit of RMB 5,000 by the end of the month could secure a rebate of RMB 20,000.
- Li Auto and Nio are expected to deliver around 23,200 and 12,300 vehicles respectively in their best-case scenarios for March, as delivery guidance for the first quarter reached 55,000 and 33,000 units.
Lackluster sales: Xpeng Motors is still struggling to get back on track after facing poor sales and criticism over its pricing strategy in 2022. Its vehicle deliveries totaled 6,010 in February, despite a recent price reduction. This is just 15.2% higher than January’s sales and 3.5% lower than a year ago.
- Huawei-backed EV maker Seres also saw little improvement following major promotions on their Aito-branded EVs, as February deliveries fell 21.7% to 3,505 units on a sequential basis.
- Sales of Changan’s EV marque Deepal declined 33.1% sequentially to 4,103 units. On Monday, the automaker kicked off a spat with rival Geely about the design of the latter’s newest EV.
- Geely’s premium brand Zeekr posted deliveries of 5,455 vehicles last month, and sales at Hong Kong-listed Leapmotor were up 180.8% from a 12-month low to 3,198 units.
Context: Sales of new energy passenger vehicles, which include all-electrics and plug-in hybrids, rose 9% year-on-year to around 546,000 units from Jan. 1 to Feb. 19, according to figures published by the China Passenger Car Association (CPCA) on Wednesday.
- Gas-powered cars were worse off, as sales slumped more than 30% annually over the same period. The CPCA has estimated 31% annual growth for passenger EV sales to 8.5 million units this year.
Keyword: Despite recovery in February, Chinese EV makers still face challenges as costs and competition increase