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EV Stocks Rally Globally as Demand Returns

Published 07/04/2023, 09:06 AM
Updated 07/09/2023, 06:31 AM
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Shares in several electric vehicle (EV) makers surged in recent weeks on a series of positive catalysts, including better-than-expected Q2 deliveries that suggest demand for EVs is coming back.

Both Tesla (NASDAQ:TSLA) and Rivian Automotive (NASDAQ:RIVN) reported solid Q2 production and delivery figures to send their shares higher on Monday. Moreover, Chinese EV startups also reported delivery figures for June, with companies like XPeng also benefiting from the unveiling of new EV models.

U.S. Leading the EV Race

Tesla shares surged almost 7% on Monday after Elon Musk’s company reported stronger-than-expected second-quarter deliveries and production numbers. Tesla said it delivered 466,140 EV units for the quarter ending June 30, easily ahead of the consensus of 445,925 delivered cars. The EV company said it delivered 19,225 Model S and X units in the second quarter, in addition to 446,915 Model 3 and Y deliveries.

On the production front, Tesla said it made 479,700 new EV units, again better than the consensus of 456,617 cars. As expected, investors reacted positively to Tesla’s Q2 delivery figures after recent price cuts inspired stronger demand.

“Price cuts implemented early in 2023 have paid major dividends for Musk & Co. as demand appears to remain very strong and production efficiencies have allowed for the massive deliveries beat this quarter,” Wedbush analyst Daniel Ives, and a prominent Tesla bull, said in a note to clients.

The quarterly deliveries report is a closely-watched development by Wall Street analysts and investors. It practically de-risks the upcoming earnings report, although analysts will be interested to see how much did the recent price cuts affect Tesla’s gross auto margins.

Tesla will report its financial results for the second quarter of 2023 after market close on July 19, 2023.

Elsewhere, Rivian Automotive (NASDAQ: RIVN) also reported production and delivery numbers for Q2 that beat the average analyst estimate. The maker of the R1T pickup truck said it delivered 12,640 cars in Q2, ahead of the Street at 11,302. Rivian also produced nearly 14,000 EV units, higher by almost 1,500 than the consensus.

“These figures remain in line with the company’s expectations, and it believes it is on track to deliver on the 50,000 annual production guidance previously provided,” the company said in a press release.

Shares surged as much as 17.4% on Monday. The EV company is expected to report Q2 results on August 8.

Ives added that reports from Tesla and Rivian “are just a drumroll to much broader electric vehicle adoption, with [General Motors] and others diving in with their own models.”

The surge in Tesla and Rivian shares signals the return of demand for EV cars. Moreover, Tesla’s decision to open up its Supercharger network for key U.S. rivals, including Rivian, Ford, and General Motors (NYSE:GM), has also improved the overall sentiment.

Lucid Motors, another U.S.-based EV maker, also saw its shares gain in recent weeks after the company announced a partnership with Aston Martin, a legendary British carmaker. It was reported last week that two car companies will partner on accelerating Aston Martin’s transition to EVs.

In a partnership estimated to be worth more than $450 million, Lucid and Aston Martin agreed to a long-term strategic technology partnership that will see Lucid supply the latter with an EV powertrain and battery systems.

“In line with its strategy, Aston Martin selected Lucid, recognizing the profound benefits of adopting its world-leading electric drivetrain technology, exemplified by the breakthrough 516-mile EPA-estimated range achieved by the Lucid Air Grand Touring," said Peter Rawlinson, CEO and CTO, Lucid.

Lucid shares were also boosted by the fact that Saudi Arabia’s sovereign wealth fund, PIF, increased its stake in the U.S.-based EV company after it acquired more shares on June 23.

Chinese EV Startups Catching Up

Chinese EV startups – Nio (NYSE:NIO), Li Auto, and XPeng – also reported their June delivery figures. Shares in these companies gained between 3-4% on Monday, benefiting from the increased optimism over the sector.

XPeng (NYSE: XPEV), which saw its stock rally in recent days on the back of the launch of the G6 Ultra Smart Coupe SUV, said it delivered 8,620 EV units in Q2, representing a 15% increase over the prior month. Deliveries of the flagship P7 series went up 17% over the prior month, pushing the total vehicle deliveries to over 300,000.

The company’s stock previously gained after XPeng said its new G6 sport utility vehicle will have a starting price of “just” 209,900 yuan ($28,882), compared with Tesla Model Y, whose starting price is 263,900 yuan.

"We do admit the G6 pricing strategy created a unique product segment of BEV (battery electric vehicle) SUV at the 200,000-230,000 yuan range, which attracts customers wanting an entry-level mid-sized BEV SUV but cannot afford a Tesla model-Y or Xpeng (NYSE:XPEV) P7i," Analysts wrote in a note.

Nio also said its monthly deliveries jumped after the company delivered 10,707 vehicles last month. For the second quarter, Nio delivered 23,520 EV units, pushing the total deliveries so far to over 344,000. Nio also unveiled a new EV model recently and started deliveries of the new ET5 Touring on June 16.

Finally,Li Auto Inc (NASDAQ:LI) delivered 32,575 vehicles in June, representing an increase of 150.1% YoY. For Q2, the company delivered 86,533 EV units, up 201.6% YoY.

For comparison purposes, Tesla’s China shipments rose 20.6% MoM to 93,680 for the month of June.

Summary

Electric vehicle stocks have soared as the sector benefits from the improving environment for stocks, which are boosted by the faster-than-expected adoption of generative AI. Tesla’s decision to open up its Supercharger network, and stronger-than-expected Q2 and June delivery figures, provided catalysts for EV stocks to grind higher in recent weeks.

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Shane Neagle is the EIC of The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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