Chinese EV Makers Under More Pressure Amid Xpeng Offering, Reports Of Chip Shortage

Shares of Chinese EV makers, which have been volatile of late, are poised to see incremental weakness Monday on the back of a couple of developments.

Xpeng Taps Equity Market Again: Xpeng Inc XPEV filed with the SEC a prospectus to offer 40 million ADS, representing 80 million class A ordinary shares. The company said in the filing it expects to raise net proceeds of about $1.94 billion from the offering, based on the assumed offering price of $49.34, which is the closing price of the ADSs Friday.

Among the possible uses of net proceeds, Xpeng listed were R&D expenses for its smart EVs and software, hardware and data technologies, sales and marketing expenses for expansion of sales and service channels and supercharging network, as well as for expansion of its footprints in the international markets, and potential investments in core technologies of smart EV.

Xpeng listed its ADSs on the NYSE in late August after raising $1.5 billion in an initial public offering at a price of $15 apiece.

Related Link: Nio Recovers From Sell-Off: What's In Store For The EV Stock?

Li Auto Inc. LI, which also debuted on Wall Street earlier this year, announced last week a 47-million ADSs offering priced at $29 per ADS, raising $1.363 billion in gross proceeds. In late August, peer Nio Inc NIO had raised $1.5 billion from a follow-on offering.

The auto industry is capital-intensive, and it therefore comes as no surprise that these companies are constantly on the lookout for augmenting capital, even as they are looking at achieving breakeven.

News of an offering is negative for stocks as it would mean dilution of share capital.

Chip Shortage Threat The sector is also likely to come under pressure from another headline concerning chip shortage faced by Chinese automakers.

Volkswagen VWAGY had to halt production due to the supply constraint, CNTech Post reported.

The German automaker's joint venture operations in China, FAW-Volkswagen and SAIC-Volkswagen, however, downplayed the issue and said production has not been completely halted but only adjusted, the report said.

Nio told the media outlet the company has prepared in advance and isn't seeing an impact as of yet.

Price Action: Nio, Xpeng, Li Auto, which had all scaled record highs Nov. 24, have seen volatility since then. All these stocks have pulled back over 30% from the highs.

In premarket trading, Xpeng was pulling back 9.20% to $44.80, Nio was down 4.76% to $40.99, and Li Auto was receding 3.90% to $29.34.

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