Chinese EV Maker Stocks Fall as Tesla Outlook Weighs

By Tracy Qu

Shares of Chinese electric-vehicle markers were lower at midday on Thursday after industry leader Tesla's latest results and its outlook for 2024 reaffirmed investor worries about slowing demand in China.

NIO led declines in Hong Kong trade, dropping 5.3%, while Xpeng fell 4.4% and Li Auto lost 1.7%. BYD dropped 1.3% and Great Wall Motor was down 2.9%.

"Considering Tesla's exposure in China and its results and outlook, that more or less confirms the concerns regarding China auto market this year," said Nomura auto analysts Joel Ying and Frank Fan.

Daiwa analyst Kelvin Lau attributed some of the reasons for Chinese EV stocks' weakness to the overall sector outlook, including likely slower growth in 2024 and margin pressure.

On Wednesday, Tesla warned of "notably" slower growth this year and said its profit margin took a hit in the fourth quarter. Analysts said other players in the EV space will face profit margin pressures similar to Tesla due to increasing competition and price cuts.

Earlier this month, Tesla lowered prices for some models in Europe and China, which triggered share-price drops for European and Chinese auto stocks.

Citi analyst Jeff Chung said in a note that EV brands' order intake last week was generally in a range of flat to 10% lower from the prior month, citing the bank's industry checks.

In a report, research firm Canalys estimated that the global EV market is set to grow 27.1% in terms of sales, slower than the forecast 29% growth in 2023. China will remain the largest EV market, with EV penetration expected to reach 40% in 2024, it said.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

January 25, 2024 00:45 ET (05:45 GMT)

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