SHANGHAI, CHINA – APRIL 18: A BYD Seagull small electric car is on display during the 20th Shanghai International Automobile Industry Exhibition at the National Exhibition and Convention Center (Shanghai) on April 18, 2023 in Shanghai, China. (Photo by VCG/VCG via Getty Images)
Vcg | Visual China Group | Getty Images
Shares of Chinese EV-makers were battered on Thursday after Tesla reported disappointing third-quarter results on Wednesday where the company missed estimates.
It was the first time Tesla, co-founded by Elon Musk, missed on both earnings and revenue since second-quarter 2019.
On Thursday morning, Hong Kong-listed shares of Chinese EV makers BYD and Xpeng fell 2.18% and 8.76% respectively. Li Auto slid 3.14%, while Nio and Geely dropped 8.36% and 3.97% respectively in Hong Kong.
During Tesla’s earnings call Wednesday, Musk cautioned that the Tesla Cybertruck – its battery electric full-size pickup truck model – would not deliver significant positive cashflow for 12 to 18 months after production begins.
Musk said the company is working to bring down the prices of its cars amid high interest rates, but it is as challenging as “Game of Thrones, but pennies.”
“I’m worried about the high interest rate environment we’re in,” he said, adding that it will be much harder for consumers to purchase cars if interest rates were to increase further.
Tesla shares closed 4.78% lower on Wednesday. Other U.S.-based EV rivals Lucid and Rivian fell more than 9% on the same day. Lucid’s stock dived a day earlier after it reported third quarter EV deliveries that disappointed the Street.
In the first six months of the year, BYD was the world’s top EV manufacturer, contributing 21% of global sales of EVs, according to research firm Canalys. Tesla trailed behind at second place with 15% market share while German carmaker Volkswagen held 7% market share in third place.
EV players are under pressure from a price war to gain market share amid intense competition.
Tesla conducted multiple rounds of price cuts over the last few months, especially in China – the world’s biggest EV market. Domestic rivals BYD, Nio, Li Auto and Xpeng have also joined Tesla in lowering the starting prices for some of their EV models.
— CNBC’s Lora Kolodny contributed to this report.