Chinese EV makers sink tracking disappointing Tesla Q3 earnings
Investing.com-- Shares of Chinese electric vehicle makers fell on Thursday, tracking an overnight tumble in Tesla (NASDAQ:TSLA) after the world’s most valuable car maker posted weaker-than-expected third-quarter earnings.
Hong Kong-listed shares of Xpeng (NYSE:XPEV) (HK:9868), Li Auto (NASDAQ:LI) (HK:2015), NIO Inc (HK:9866) and BYD (HK:1211) fell between 2% and 9%, with Xpeng and NIO logging the heaviest losses. CATL (SZ:300750), Tesla's biggest battery supplier, fell 1% in Shenzhen trade.
Tesla fell nearly 5% on Wednesday after its third-quarter EPS missed analyst expectations, as a string of price cuts weighed on the firm’s gross margin. Deliveries also weakened in the third quarter, although this was attributed to production disruptions from upgrade work at various factories.
Still, more worrying were comments from CEO Elon Musk, who raised concerns over the impact of higher interest rates on car buyers. Musk also said the firm was cautious over going “full tilt” on a factory in Mexico, citing “stormy” macroeconomic conditions.
His comments marked a shift in tone from last year, where Musk had assured investors that Tesla was “recession resilient.”
Tesla rolled out a series of price cuts this year, particularly in China, where it faces stiff competition from local players. While the move had helped the car maker maintain demand, it had severely dented its margins.
Tesla’s cuts had also triggered a price war among Chinese manufacturers- a trend that is expected to almost unanimously dent profit margins for regional players. Tesla’s weak third-quarter showing likely heralds a similar trend for most Chinese EV makers.
China is among Tesla’s most important markets, with the country also accounting for a bulk of Tesla’s
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