EV Stock 2021 Halftime Scorecard: Tesla Bogged Down By China Worries, Nio Underperforms And More

Electric vehicle manufacturers experienced volatility in the first half of the year, mirroring the trend in the broader market.

The stocks pulled back in early March, dragged by the tech-induced market downturn. Sentiment toward EV stocks continued to remain cautious amid worries concerning the global semiconductor shortage and increasing competition.

How EV Stocks Fared: EV stocks are all in the red, with Tesla, Inc. TSLA underperforming its Chinese counterparts, namely NIO Inc. NIO, XPeng Inc. XPEV and Li Auto Inc. LI.

All four stocks followed an almost identical trajectory.

After peaking at different times in January, the EV stocks bottomed in early March, coinciding with the tech sell-off. The rebound from the trough proved short-lived and did not have enough momentum to take the stocks back to previous peaks.

After lackluster performances over much of March and April, these stocks retreated yet again and touched fresh lows around mid-May. Since then, they have been on the mend.

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That the first-half performance in 2021 was lackluster is unsurprising given the strong rally the EV stocks witnessed in 2020. EV makers weathered the COVID-19 pandemic, which brought the global economy to a standstill in 2020, fairly well, and the resilient fundamental performance was reflected in their stock prices.

Tesla Plagued By China Worries, Poor Earnings Quality: Tesla ended 2020 on a strong note, having delivered 499,550 vehicles. The deliveries momentum continued into 2021. The company sold a record 184,800 vehicles in the first quarter.

The company extended its profit-making streak. Yet much of the earnings came from regulatory credits and profit on the sale of Bitcoin BTC/USD. The first-quarter pretax income of $533 million included $518 million in regulatory credits, and a $101-million benefit from a short-term trade in Bitcoin.

Moreover, Tesla is facing a lot of flak in China, one of its key markets. During the Shanghai auto show, customers held a protest over quality issues with its vehicles. The Chinese government has also banned Tesla vehicles from sensitive military premises for fear of cameras installed in its vehicles used for spying.

Amid these negative headlines, Tesla's sales in China took a dip in April before bouncing back in May.

Related Link: Nio's ET7 Sedan Snags Red Dot Product Design Award

Nio Prevails Despite Chip-Related Disruptions: Nio started 2021 on an upbeat note. The Nio Day event for 2020 that was delayed due to the pandemic was held Jan. 9, and the company made many product- and service-related announcements. More importantly, the company unveiled its first-ever sedan model, named the ET7.

Nio reported record monthly deliveries for January but the momentum cooled off in February before picking up steam in March, when it broke January's record. With chip shortages stalling production for a few days in late March and early April, the company reported modest month-over-month declines both in April and May.

Among the other key developments during the year-to-date period were the partnership with Chinese oil giant Sinopec Shanghai Petrochemical Company Limited SHI rolling out its Power Swap Station 2.0 and expansion into Norway.

XPeng Pulls Out The Stops: XPeng had a fairly decent performance over the first half. The company was not appreciably impacted by the chip shortage.

Even as Nio reported a sequential dip in monthly deliveries both in April and May, XPeng managed to carve out modest growth.

The company was constantly in the headlines, launching variants of existing models, announcing new models, exporting vehicles to Norway and unveiling its proprietary next-gen XPILOT 3.5 autonomous driver assistance system.

Related Link: Emerging EV Market Dynamics: BofA Says GM, Volkswagen Aggressive Among Legacy Automakers

Li Auto Makes Waves: Li Auto, which keeps a low profile unlike its flamboyant domestic rivals Nio and Xpeng, also had a decent outing in the first half. The company has a lone model named Li ONE, an all-electric SUV.

The company unveiled a new version of its Li ONE vehicle in late May. To fund R&D, the company raised $862.5 million through a convertible debt offering in April.

Photo: courtesy of Tesla.