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Can China's EV Players Catch Up to Tesla?

By Dan Caplinger - Updated Jul 1, 2021 at 1:10PM

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Stock markets were mixed to start the second half of 2021, but many investors focused on electric vehicle sales numbers.

The stock market started out the second half of 2021 on the same mixed note that we've seen quite a bit recently. As of 11:30 a.m. EDT today, gains of 85 points to 34,587 for the Dow Jones Industrial Average (^DJI 1.27%) helped build optimism about the market's prospects, while the S&P 500 (^GSPC 1.73%) climbed further into record territory with a rise of 11 points to 4,309. Only the Nasdaq Composite (^IXIC 2.09%) gave up ground, falling 40 points to 14,464.

The first day of a new month has always been a big one for automakers, because sales figures typically come out as soon as previous-month figures are available. Increasingly, though, auto investors are looking first at electric vehicle (EV) stocks for their latest sales figures. In particular, popular Chinese EV manufacturers have gotten a lot of attention. Today, we'll look at the latest numbers from NIO (NIO 1.39%) and XPeng (XPEV -0.81%) and see whether the Chinese EV industry has a chance to catch up with global leader Tesla (TSLA 4.67%).

Two people in car looking at map.

Image source: Getty Images.

NIO keeps hitting the gas

Shares of NIO were down 3% late Thursday morning. The Chinese EV maker showed continuing growth in June and the second quarter, but investors seemed to have wanted even better performance from the company .

NIO reported delivering 8,083 vehicles during June 2021. That was more than double the 3,740 vehicles that the company delivered during the same month in 2020, and it represented a new monthly record for NIO.

There was a good mix of sales. Nearly half of the deliveries, or 3,755, were the ES6 five-seat high-performance electric SUV. Another 2,830 vehicles were the SUV EC6 coupe, while the remaining 1,498 deliveries were the larger ES8 six-seat and seven-seat SUV. June's performance brought total second-quarter delivery counts for NIO to 21,896, representing a quarterly record and a rise of nearly 112% year over year.

XPeng drives on

Meanwhile, shares of XPeng moved higher by nearly 2%. The automaker's delivery numbers managed to narrow NIO's lead, as XPeng's growth was much more impressive.

It delivered 6,565 EVs during June. That was a more than sevenfold increase from a year ago, when XPeng had only 916 vehicle deliveries during June 2020. The automaker's numbers were the highest ever for a month, and were up 15% just since May 2021.

Electric sedans were the most popular among XPeng's vehicles, with the automaker delivering 4,730 P7 models. However, 1,835 deliveries of the G3 compact SUV also helped the company hit a new quarterly record of 17,398 deliveries between April and June.

Still miles behind Tesla

The growth figures that XPeng and NIO are putting up are definitely impressive. But it's important not to overstate the case for these two Chinese companies being Tesla-beaters.

That's largely because Tesla has a huge lead over its competition in terms of volume. During the first quarter of 2021, Tesla delivered about 185,000 vehicles, for a monthly run rate above the 60,000 mark. That gives the company about seven to nine times more deliveries than NIO or XPeng.

Moreover, Tesla's growth has been quite impressive. First-quarter deliveries were more than double the year-earlier number. Optimistic predictions for second-quarter deliveries are looking for somewhere around the 200,000 mark -- and many still believe that the automaker could hit CEO Elon Musk's target of 1 million deliveries for the full 2021 year.

There's no denying that NIO, XPeng, and other up-and-coming EV companies have huge opportunities to grow their businesses. The shift from conventional vehicles could lift plenty of players in the EV space. However, claims that XPeng or NIO will catch up with Tesla are pure hyperbole at present, and investors can count on Tesla to affirm that assessment as soon as it calculates its own second-quarter delivery numbers.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. and Tesla. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Nio Inc. Stock Quote
Nio Inc.
NIO
$21.11 (1.39%) $0.29
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,761.05 (1.27%) $424.38
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,280.15 (1.73%) $72.88
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$13,047.19 (2.09%) $267.27
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$900.09 (4.67%) $40.20
XPeng Inc. Stock Quote
XPeng Inc.
XPEV
$24.41 (-0.81%) $0.20

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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