Affected by Tesla's poor Q1 sales performance, most Hong Kong automotive stocks weakened today. As of the close, NIO SW (09866. HK), Xiaopeng Auto W (09868. HK), Geely Auto (00175. HK), BYD AG (01211. HK), and Ideal Auto W (02015. HK) have fallen 4.67%, 3.14%, 2.54%, 2.27%, and 2.18% respectively.
Note: Performance of automotive stocks
The collective weakness of Hong Kong automotive stocks may be related to Tesla's release of its 2024 Q1 automotive production and delivery reports. The hot sales of Xiaomi cars have also brought considerable pressure to other car companies.
Tesla released its first quarter sales data, delivering a total of 38.68 vehicles in the first three months of this year, far below the average analyst expectation of 44.90 vehicles, marking the largest underperformance in history.
The delivery data for the first quarter was also Tesla's first time falling below the 400000 vehicle mark since the third quarter of 2022, a decrease of over 8.5% compared to the delivery volume of 422875 vehicles in the first quarter of last year, marking the first year-on-year decline since the second quarter of 2020.
Affected by this news, Tesla closed Tuesday down 4.90% at $166.63.
Why is Tesla's delivery performance poor?
In fact, at the end of the first quarter, many investment banks on Wall Street gradually lowered their forecasts, and some analysts also accepted the possibility of a year-on-year decline. Media analysis suggests that the slowdown in consumer demand has become the biggest concern for this electric vehicle leader, as high interest rates keep potential car buyers on the sidelines.
The poor delivery performance of Tesla in the first quarter may be related to the following factors.
The first is the intensifying market competition. With the rapid growth of the electric vehicle market, Tesla is facing more and more competitors. As one of the world's leading electric vehicle manufacturers, BYD's pure electric vehicle delivery volume in the third quarter of 2023 was close to Tesla, indicating an increase in its competitiveness. This intense market competition may put pressure on Tesla's market share and delivery performance.
Secondly, emerging automotive brands such as Xiaomi Group have also joined the competition in the electric vehicle market. According to reports, the Xiaomi SU7 achieved significant sales results in the early stages of its launch, which may have diverted potential Tesla customers to some extent, indirectly affecting Tesla's delivery situation.
The logic behind the decline of the automotive sector
In summary, Tesla's sales decline is partly due to the squeezing effect brought by other domestic competitors. However, the increasing competitive pressure in the Chinese electric vehicle market is an undeniable fact, especially with Xiaomi's recent high-profile entry into the market, which has made other competitors feel cold.
Xiaomi Motors announced on March 28th that the prices of its three new cars were set at 215900, 245900, and 299900 yuan, further lowering the benchmark water line for domestic electric vehicle prices. And Xiaomi's recent hot sales will compete for the sales share of other car companies.
The current price war in China's automotive industry is still ongoing. Since the beginning of this year, with the further increase in penetration rate and consumer recognition of new energy vehicles in the domestic market, a new round of price war has been launched to further increase sales and seize more market share, including foreign and joint venture car companies such as Tesla, SAIC Volkswagen, SAIC GM Wuling, and GAC Honda, as well as local independent brand car companies led by BYD and Ideal.
Stimulated by price wars, many car companies have seen an increase in sales since the beginning of this year. On April 1st, Ideal, Zero Run, NIO, Xiaopeng, and Nezha Motors announced their delivery data for March, all of which achieved significant month on month growth.
But the increase in quantity and the decrease in price are not good news for car companies. And Xiaomi's entry may once again drive a reshuffle of the domestic car market.