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Why XPeng, Li Auto, and Kandi Technologies Stocks All Dropped Today

By Howard Smith – Updated Mar 4, 2021 at 4:10PM

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Investors seem to be shifting some interest away from the Chinese electric-vehicle makers.

What happened

Chinese electric-vehicle (EV) makers XPeng (XPEV -4.98%), Li Auto (LI -5.96%) and Kandi Technologies (KNDI -2.26%) are seeing investor interest wane after being in the spotlight for much of 2020. Today, stocks of the three companies were down along with much of the EV sector in general.

At the close on Thursday, XPeng was down 2.2%, Li Auto fell 2%, and Kandi Technologies was 8.4% lower.

So what

Some of the recent declines have followed disappointing earnings from peer NIO (NIO -6.44%) earlier this week. But stocks in these Chinese EV makers are all down since the start of the year, too. 

XPEV Chart

XPEV data by YCharts.

XPeng reported a sharp drop in February vehicle deliveries versus January, though the Chinese New Year holiday played a role in that. After announcing 6,015 deliveries in January, XPeng only recorded 2,223 last month. Even so, deliveries in the two months combined grew 577% year over year. Deliveries of Li Auto's One SUV soared 755% in February versus 2019.

But valuations on the Chinese EV makers have also outgrown the underlying businesses, helping to explain the 2021 correction that continued today. 

Blue Li Auto One new energy SUV

Li Auto's new-energy One SUV. Image source: Li Auto.

Now what

The only real news today was an expansion of the battery options in Xpeng's standard-range P7 sedan. There is now a battery pack with a 300-mile range at full charge. The model sells for as low as the equivalent of approximately $35,500, including subsidies. 

XPeng, Kandi, and NIO compete with Li Auto, but Li also has a slightly different new-energy vehicle for the Chinese market. Its One SUV includes a small gasoline engine that can be used to recharge its batteries, allowing for longer travel between charging stations. This can be helpful for consumers in the countryside, where charging stations remain scattered. 

The valuations of Li Auto, Xpeng, and NIO soared last year, to where even eye-popping comparable-delivery numbers are now expected. Market capitalizations of the three range from $20 billion to $60 billion. Kandi is still valued lower than $1 billion, but it is just beginning to expand to the U.S., where it hopes to create a niche following. 

The overall EV sector had quite a year in 2020, and many Chinese producers garnered investor dollars since they're in the largest global auto market. But these are long-term investments, with the companies coming off very low bases of sales. It seems that some investors are realizing it will be a long ride and are deciding to cash in some outsize gains.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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