BYD stock dived Tuesday, after a regulatory filing showed Warren Buffett’s Berkshire Hathaway (BRKB) sold off more than 1 million Hong Kong listed shares of electric vehicle giant BYD (BYDDF) last week. China-based EV makers are due to report August sales later this week.
China-based EV makers Mind (NIO), XPeng Motors (XPEV) and Li Auto (LI) are expected to release August electric vehicle sales numbers Thursday, as Covid-19 outbreaks and restrictions continue to be a major factor throughout the country.
The China Association of Automobile Manufacturers reported that both total automobile production and sales dropped year-over year for the first half of 2022. Based on sales numbers from the first three weeks of August, it is unclear whether Nio or XPeng or Li Auto will clear 10,000 deliveries, according to data released by the CAAM last week.
Thursday’s China EV sales numbers should give investors clues to whether sales will rebound in the second half of the year.
On Monday, BYD announced that it had tripled its net income in the second quarter. This comes as the company has reported that it sold 355,021 new energy vehicles (NEVs), ballooning 256% year-over-year, in the second quarter. It also increased 24% compared to the 286,329 deliveries in the first quarter. NEVs include fully electric vehicles, plug-in hybrids and fuel-cell vehicles.
Tesla (TSLA) reported Q2 deliveries at 254,695, a drop of nearly 18% from Q1. Elon Musk’s EV giant still leads BYD in sales of all-electric vehicles.
Tesla Stock Vs. BYD Stock
BYDDF stock sank 8% to 32.08 during Tuesday’s market trading. The stock briefly cleared a cup-with-handle pattern with a 39.81 buy point in July. BYD shares reversed below their 10-week moving average, undercutting the buy point by more than 7% to 8% and triggering the automatic sell rule.
On Aug. 3, BYD reported record July sales of 162,350 electric vehicles and plug-in hybrids, up 222% vs. a year earlier. As of Aug. 21, BYD had sold more than 97,000 vehicles, according to data from the China Association of Automobile Manufacturers.
The automaker is rolling out several new EV-only and hybrid-only models in the coming months. The Seal sedan is BYD’s first clear cut competitor to Tesla’s Model 3. The vehicle has roughly equal dimensions and range to a Model 3 — and $10,000 cheaper.
Deliveries are expected to start in late August. BYD said Seal preorders had topped 60,000 since they opened on May 20.
BYDDF is one of the world’s top EV producers. It produces electric cars and buses along with a line of hybrids. Warren Buffett’s Berkshire Hathaway has been a longtime investor in BYDDF, owning more than 20% of the company before selling 1.33 million for around $47.15 million on August 24.
Berkshire owns slightly less than 8% of BYD, based on all share classes.
In July, there were rumors that Buffett would sell some or all of his long-term stake. Berkshire bought 225 million Hong Kong listed shares of BYD in September 2008. Cathie Wood’s Ark Innovation ETF (ARKK) also owns a small stake in BYD.
BYD does not have a Composite Rating, a key IBD benchmark. But it has a 72 Relative Strength Rating, an exclusive IBD Stock Checkup measurement for share price movement with a top grade of 99. The EPS rating is 57.
China EV Sales: Nio Stock
NIO shares dropped 1% to 19.59 Tuesday. The stock shook off early losses on Monday and rose 0.2%. The stock is in the midst of consolidation with an official 24.53 buy point, according to MarketSmith. However, in the current market environment extreme caution should be exercised.
US-listed China EV stocks, including Nio, rallied in May and June, but tumbled in July as US delisting fears reared up again.
For the first three weeks of August, Nio had 6,140 vehicle sales, according to the China Association of Automobile Manufacturers.
The production of the ET7, its flagship electric sedan, and the EC6, a midsize sedan, in July 2022 was constrained by supply issues, Nio said on August 1. The company reported it has been “working closely with supply chain partners” and expects accelerated production in the third quarter.
In June, Nio unveiled the new sports sedan ES7 model and began to take orders for the ES8 and ES6 vehicles.
The Shanghai-based Nio delivered 10,052 electric vehicles in July, jumping 27% vs. a year earlier but down 22% vs. June. July sales included 7,579 SUVs and 2,473 sedans.
Nio announces second quarter earnings on Wednesday, Sept. 7, before the market opens. The company has a Composite Rating of 32. Its Relative Strength Rating is 40. It has an EPS Rating of 7.
Li Auto Stock
LI stock fell 2% to 28.53 Tuesday after shedding 3.4% on Monday. A 23% pullback from a late-June high has left shares below support at their 10-week moving average.
Li Auto sold 2,760 vehicles in China as of Aug. 21, the China Association of Automobile Manufacturers reports.
The company missed its second-quarter targets on Aug. 15, but revenue increased 73% to $1.3 billion. Li Auto reported a net loss of 4 cents per share, according to FactSet. The company had a loss of 2 cents per share in Q1 2021.
Management provided disappointing guidance, expecting to deliver between 27,000-29,000 vehicles in the third quarter.
Despite production impact from coronavirus lockdowns this year in China, Li Auto reported an uptick year-over-year in EV deliveries in July. The company sold 10,422 vehicles, an increase of more than 21% from last July.
Li Auto unveiled its new L9 model SUV in June, which received 30,000 orders in the first 72 hours of its availability. Deliveries began Wednesday, August 30, the company announced. Li Auto is guiding expectations to 10,000 deliveries in September.
On August 1, the company said there had been more than 50,000 L9 orders since its launch on June 21, with more than 30,000 confirmed nonrefundable orders.
Li Auto stock has a 66 Composite Rating out of 99. It has a 90 Relative Strength Rating. The EPS rating is 26.
China EV Sales: XPeng Stock
XPEV shares edged down 2% to 18.11 Tuesday after dropping 1.2% in the previous session. XPeng stock has struggled in 2022. A monthlong rally found resistance at the stock’s 200-day moving average in June. XPEV has dropped below its 10-week line and is trading about even with its August 2020 IPO price.
The China-based electric-vehicle startup reported a greater-than-expected loss while narrowly topping revenue expectations on August 23. XPeng reported a net loss of 46 cents per share while sales grew 87% to $1.1 billion.
Total vehicle deliveries for the second quarter increased 98% to 34,422. XPeng’s July sales reports showed the company’s total sales outpaced both Li Auto and Nio. The company had 11,524 vehicles delivered in July, a 43% increase year-over-year. So far in August, XPeng has delivered 6,031, according to China Association of Automobile Manufacturers.
XPeng currently has a three-vehicle lineup, with the new G9 sedan on the way. The carmaker started accepting reservations for the G9 in August, followed by an official launch in September 2022, XPeng has announced. This new flagship SUV is set to replace the aging G3.
For Q3, XPeng expects vehicle deliveries between 29,000-31,000, which would represent double digit year-over-year increases, but a decline from Q2. With July deliveries already in hand, that suggests XPeng deliveries will be below 20,000 for August-September combined.
XPEV stock has a weak 10 Composite Rating out of 99. It has a 10 Relative Strength Rating, also very weak. The EPS rating is 2.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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