Nio, Xpeng and Li Auto 23H1 Review：Who will have the last laugh?

With the release of Nio second-quarter results on August 29, the three EV companies have delivered their first-half 2023 report card. So how did Nio, Xpeng and Li Auto do in the first half of this year? In the extremely competitive China EV market, who will have the last laugh?

In terms of stock price, Li Auto's deliveries in recent years have consistently exceeded market expectations, and its stock price has significantly outperformed the broader market; Xpeng, despite its relatively weak sales, has been driven by events such as the launch of the G6 and its cooperation with Volkswagen and DiDi, which has led to a relatively bright stock performance recently; and Nio, because of its weak sales and widening losses, has seen its stock price perform more sluggishly.

Nio won't deliver any new models under its main brand next year, but only a few revisions, with the next model under its sub-brand "ALPS" to be launched in the second half of 2024. The next model of Nio's sub-brand "ALPS" will be launched in the second half of 2024, which will have limited appeal to consumers. Nio will not deliver any new cars next year, and Li Bin hopes to stabilize the company's sales at more than 20,000 units. Nio plans to release and deliver the new EC6 in September, and all 8 models have officially completed the switch to the second-generation technology platform. Li Bin said there will be no new products delivered next year, but there will be annual improvements, and the next model of his sub-brand "ALPS" will be launched in the second half of 2024. The break in the product lineup will have an impact on Nio's product competitiveness.

Li Auto has yet to prove itself in the BEV segment. As the BEV segment is more involutional, it may be difficult for Li Auto to continue its success with PHEVs by then. Li Auto will launch the MEGA, a BEV MPV, at the end of the year, and four new models next year, including a PHEV SUV and three pure-electric models. Including the MEGA, Li Auto will have eight models on sale at the same time next year, four of which will be purely electric, and the number of pure-electric models and PHEV models on sale will be basically 1:1. Li Auto is currently enjoying great success in the programmable segment, but it has yet to prove itself in the pure-electric segment. Li Auto's entry into BEV next year is likely to be in direct competition with Tesla's Model 3 and Model Y. The company will also be able to compete with Tesla's Model 3 and Model Y in the BEV segment. Li Auto's success in the BEV segment is uncertain, as the segment is more voluminous and has many competitors.

Xpeng acquired DiDi's car building business to build a 150,000RMB-class model, targeting annual sales of at least 100,000 units. If the new model sells well, Xpeng can rely on the sale of software for self-driving to bring in a considerable amount of income, but the new model can can affect consumer perception of Xpeng's brand, affecting the sales of Xpeng's main line of models. Xpeng and DiDi announced that they are ready to join forces to build an A-class smart electric car (project code name "MONA"), which will probably be launched in the fourth quarter of this year, and mass production will begin in 2024. The cooperation between Xpeng and DiDi is a risky move: if the MONA model sells well, Xpeng can rely on the sale of self-driving software to bring in a considerable amount of income, but the launch of MONA may affect consumer brand awareness of Xpeng, which may affect the sales of Xpeng's main line of models.

Profitability, benefited from the decline in lithium prices, the profitability of Nio, Li Auto improved in the second quarter, while Xpeng by the impact of inventory impairment gross margin further deteriorated. WIND data show that the average price of battery-grade lithium carbonate in the second quarter of 254,600 yuan, a decline of 36.79% from the previous quarter. According to estimates, the decline in lithium prices in the second quarter corresponds to a decline of 8,000 yuan in vehicle costs. Xpeng car gross profit margin further deteriorated from the previous quarter, mainly due to the inventory impairment of G3i and inventory purchase commitment loss, which had a negative impact on the gross profit margin of the car by 4.5 percentage points.

In terms of cash reserves, Nio and Xpeng are facing cash flow pressures. Extrapolating linearly from the second quarter's profit and loss, Nio's net cash will last another 0.8 years, and Xpeng's net cash will last another 2.6 years. Nio and Xpeng will likely continue to raise equity financing and keep diluting the original shareholders' equity. As of mid-2023, Li Auto's cash and cash equivalents, restricted cash, time deposits, and short-term investments will be 73.77 billion yuan; Nio's will be 31.5 billion yuan; and Xpeng's will be 33.7 billion yuan, according to the mid-year report. In terms of profitability, Li Auto has already achieved profitability, while Nio and Xpeng are struggling to turn a profit in the near term. Nio and Xpeng are facing cash flow pressure, and are likely to continue to carry out equity financing, thus on the dilution of the original shareholders' interests. on August 28, Xpeng and DiDi announced this strategic cooperation. Xpeng will launch a conditional acquisition of DiDi's intelligent car development business assets by issuing additional shares, with a maximum total consideration of HK$5.835 billion.On June 20, Nio issued an additional 84.7 million shares to the Abu Dhabi Investment Authority of Love, at a price of US$8.72, raising a total of US$740 million.

Li Auto's PHEV model has captured the pain points of home users, and has been a big success in terms of sales, but because its BEV model has not yet been launched, the company's prospects have a certain degree of uncertainty; Nio and Xpeng's main models due to direct competition with Tesla, and the impact of Tesla can only be forced to reduce prices, and it is difficult to turn the short-term loss into a profit. Looking ahead, next year, Xpeng and Li have a new model launch, sales have a certain guarantee; and Nio's main brand will not have a new model delivery next year, there will only be some revisions, the model product breaks will constitute a certain impact on Nio's product competitiveness.

Overall, from the point of view of the acceptance of the existing models and the planning of new models, Li and Xpeng are expected to live longer in the extremely volatile new energy vehicle market, while the main brand of Nio next year's model break will have a certain impact on the competitiveness of its products.