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Chinese electric car deliveries ramp up but design flaws still cast a shadow

Written by Wency Chen Published on   2 mins read

Sales of new energy vehicles in China is expected to reach 20% of total car sales by the end of 2025, the state council says.

Chinese electric vehicle (EV) makers have reported solid gains in sales for October with Nio (NYSE: NIO) and Li Auto (NASDAQ: LI) reaching new monthly records, fueling a rally in the stocks, while reports on design flaws and incidents are clouding the bright picture in China.

Nio managed to double deliveries from the same period a year ago to 5,055, the eighth consecutive month of growth, the company announced on Monday. The deliveries included 2,695 of its 5-seater premium smart electric sport-utility vehicle (SUV), the ES6, and 1,477 of its 6-seater and 7-seater flagship premium smart electric SUV, the ES8. The company also shipped 883 of its 5-seater electric coupe SUV, the EC6. Ten months into 2020, Nio has delivered 31,430 vehicles, up 111.4% year-on-year (YoY), despite a sales slump at the start of 2020 due to the coronavirus pandemic.

Local peer Li Auto also reported a strong performance. October deliveries hit a fresh new high of 3,692 Li ONEs, bringing the year’s tally to 21,852 vehicles. Meanwhile, Xpeng (NYSE: XPEV) dispatched a total of 3,040 EVs last month, up 229% YoY. Xpeng’s number included 2,104 P7s, the sports sedan, and 936 G3s, its compact SUV. WM Motor sold 3,003 vehicles during the month, up 46.1% YoY, reaching 16,889 for the year—which is already more than in 2019.

As the Chinese automobile sector is seeing solid growth, stocks are surging. Nio shares jumped by 8.96% to USD 33.32 at the close on Monday, while Li Auto climbed 13.44% to USD 22.88 and Xpeng 6.91% to USD 20.72. WM Motor is in the process of listing on Shanghai’s Nasdaq-style Star Market, after closing a RMB 10 billion (USD 1.49 billion) Series D+ round in late September.

Lingering concerns

Amid strong sales, Chinese EV makers are still wrestling with concerns about car incidents and doubts around design flaws. WM Motor announced last week that it will recall 1,282 vehicles equipped with a faulty battery cell produced between June 8 and September 23, after the explosion of a WM EX5 SUV. According to a report by 36Kr, the incident was the fourth consecutive fire and smoke case that happened to the model in the last 35 days.

Li Auto is struggling with the “broken axle” incident, observed in six accidents involving Auto Li’s car in the past nine months. The company’s investigation showed that its suspension structure breaks easily in crashes, so it announced a “hardware upgrade plan” for owners of cars manufactured before June 1. The company will replace the front suspension lower arm ball pins with a higher disengagement force at no charge.

Sales of new energy vehicles in China—including electric, plug-in hybrid, and hydrogen-powered vehicles—is expected to reach 20% of total sales by the end of 2025, according to the latest industry development plan for 2021 to 2035, released by the state council on Monday.


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