China electric car stocks Nio (NIO), Xpeng Motors (XPEV) and Li Auto (LI) took a breather after huge run-ups and as Li Auto recalled more than 10,000 electric vehicles, or roughly half the vehicles sold this year. BYD (BYDDF) was not active early Friday while Tesla (TSLA) traded modestly lower.
XLi voluntarily recalled some Li One electric SUVs Friday over a suspension issue. Starting Nov. 7, Li will replace for free "the control arm ball joint of the front suspension" on 10,469 Li Ones built on or before June 1, the Beijing-based electric vehicle (EV) startup said in a statement. It expects to complete the replacement within three months.
Li began mass production of the One SUV in November 2019 and has sold 21,852 vehicles year to date.
On Thursday, analysts at Citi turned more bullish on China EV stocks. They hiked PT on Nio stock to 46.40, from 33.20, citing positive sector outlook and Nio's subscription business model. They also started coverage of Li Auto stock and Xpeng, expecting Li to break even in 2022 and fellow EV startup Xpeng to break even in 2024.
Shares of Nio, Li and Xpeng all scored big gains Thursday. They have all shot up about 40% to 85% in this young month after reporting robust October deliveries, as China EV sales continue to rebound after the pandemic. BYD, which also reported booming October EV sales, has shot up 27% in November.
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Li Auto Stock, China Electric Car Stocks
On Friday, Li Auto stock shed 4.7% near 26.75 in early stock market trading. Li stock is extended from a breakout past 21.96 Monday, meaning shares are not in buy range.
Among other China electric car stocks, Nio fell 4.2% early Friday and is far extended from a 15.55 buy point. Xpeng erased premarket losses to climb 1%, after spiking 31% on Thursday and 23% on Wednesday. It's far beyond a 23.20 early entry and a 25.10 official buy point.
BYD stock, which trades over the counter, was quiet at record highs.
Tesla Stock Retreats
Tesla stock dipped 2% to 430.10, but holding above the 50-day line and working on a 466 handle entry.
Like Li Auto, Tesla is also doing a suspension recall in China. Tesla is recalling thousands of U.S.-made Model 3 cars, but says it's being forced to do so by the Chinese government. It says the problem is with Chinese drivers.
This year, soaring Tesla and Nio shares fueled billion-dollar IPOs for new electric car stocks Li Auto and Xpeng Motors. Of late, Tesla sales are under pressure in the key China market while Nio, BYD and their peers become a bigger threat to its dominance. Tesla has slashed made-in-China prices several times in 2020. It has now begun exporting Model 3 cars from the Shanghai plant to Europe.
China EV Earnings Loom
Buffett's Berkshire Hathaway (BRKB) bet big on BYD as far back as 2008, just five years after Tesla was founded and the same year that Tesla revealed its first EV, the Roadster. Buffett now owns a 25% stake in BYD, whose shares have quadrupled this year.
Most of the U.S.-listed China electric car stocks disclose third-quarter earnings in the next couple weeks. Nio reports Nov. 17, Li Auto Nov. 13, Xpeng Motors on Nov. 12 and Kandi (KNDI) Nov. 9.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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Li Auto Stock Falls On Li One Recall; China Electric Car Stocks Nio, Xpeng Take Breather - Investor's Business Daily
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