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3 August 2022

Xpeng and Nio record shipments despite supply issues

Both Xpeng and Nio – Chinese EV manufacturers with some deliveries overseas – have delivered more spectacular results for their latest quarters, but not everyone believes every word they say.

Nio’s numbers have been under scrutiny since June, when short seller Grizzly Research issued a report suggesting that Nio’s partnership with Weineng in China, a company set up at arms-length from Nio, to establish battery subscription sales, which is responsible for quite a lot of battery shipments. Grizzly suggested that revenues had been artificially inflated by between 10% and 95% by Weineng in what it described as a Valeant-esque accounting swindle whereby Nio ships its spare batteries out to Weineng every Quarter.

It said that Weineng’s disclosure of 19,000 battery subscriptions, were at odds with holding 40,053 batteries in inventory, although we can’t quite see why.

In July Nio’s board said that although it had said all the allegations were untrue, it would form an independent committee to investigate the allegations, which have a law firm and a forensic accounting firm in tow. Despite this there has been no significant movement in the stock of Nio over these allegations.

And last week Nio reported that it had shipped 10,052 vehicles in July alone, up 26.7% year on year, taking its delivers for the year to 60,879 up 22.0% and a cumulative total of 227,949 ever.

Deliveries consisted of 7,579 premium smart electric SUVs, and 2,473 premium smart electric sedans. The reason it gives that the deliveries are not even higher is due to production of both the ET7 and the EC6 being constrained by the supply of casting parts, which it hopes to be through during Q3.

Nio has installed 1,000 Power Swap stations where EV owners can swap, instead of re-charge their batteries. This is common practice in China and it says it has completed 10 million battery swaps.

Meanwhile XPeng exceeded EV shipments beyond Nio, with 11,524 vehicles delivered in July up 43% year on year with a total of 80,507 EVs shipped year to date. Total vehicles delivered in the first seven months of 2022, were up 108%. Cumulative deliveries reached nearly 220,000 as of the end of July 2022, almost in line with Nio.

What we find interesting is that Xpeng has been threatening to catch Nio over the past few quarters, and now that it has, wonder why the two companies are valued at $33 billion for Nio and $19 billion for Xpeng. Are US investors simply less aware of Xpeng?

In August, XPeng will begin taking orders for its new flagship G9 SUV followed to be officially launched in September.