Shares of Chinese EV maker NIO are tumbling this morning after reporting wider-than-expect second-quarter losses. At the same time, rival EV manufacturer BYD (BYDDY) sees surging profits and record delivery figures. Yahoo Finance Live examines the impact of the price wars becoming more apparent in China’s EV market.
Video Transcript
BRAD SMITH: We’re switching gears here. Chinese EV startup, NIO, trading to the downside this morning after a worse than expected second quarter report. The adjusted loss of $0.45 a share was steeper than the Street expected. An upbeat outlook for the current, however, offers investors something to cheer. But they’re not really doing much cheering right now, Rachelle.
RACHELLE AKUFFO: That’s right, Brad. Meanwhile, a different story for China’s EV market leader, BYD, record deliveries sent second quarter profit surging 145%. Net income more than doubled to 6.8 billion Yuan for the period. The report comes amid an ongoing price war with Tesla trying to keep pace with rivals. You see there the stock up more than 1.5% this morning.
It’s an interesting picture when we look at the China’s EV space because they do have that pricing power, which is why we do tend to keep seeing Tesla bringing some of those prices down much to the chagrin of the margins here. But even as we look at what’s been happening with NIO, Q2 deliveries disappointing. Seeing a consumer shift from SUVs to sedans. So you also have the pricing mix. And then you have the changing consumer trends as well to consider.
BRAD SMITH: Yeah. Spot on. And looking at BYD’s number on the other side of this, you think about some of the margins that they saw. Margins improved year-over-year. Gross profit margins were 13.5%. This same period last year, it was about 12.8%. Also, you basically saw the sales growth, particularly there in that region move higher by 66%. That is significant. Of course, you got to think back to what the base is here as the company is continuing to make sure that they can deliver on passenger vehicles and produce vehicles, as well.
They did deliver 1.2 million passenger vehicles and about 642,000 battery electric vehicles from a year earlier. That represents a move higher of more than 90%, about 95% for the passenger vehicles. So that particularly getting some notice from the Street here. You’re seeing shares be rewarded there. That’s up by about 4%. And then just going back over to NIO, not to be confused with the 2000s R&B singer, you’re seeing deliveries actually quarter over quarter just a little bit there. And particularly here, you look from Q1 where they saw about 31,000 deliveries take place.
This most recent quarter, only about 23,520 deliveries took place. However, the deliveries as we’re continuing to watch them in tandem with sales, the vehicle sales converted to US dollars, $990.9 million in the second quarter of 2023. That represents a decrease of about 24.9% from the second quarter of last year, Rachelle.
RACHELLE AKUFFO: Let’s take a note. BYD, a favorite there for Berkshire Hathaway.