The supply chain problems will not abate for the auto industry. But that’s not the biggest reason why shares of Chinese electric vehicle manufacturers fell early Monday.
(ticker: LI) lowered its guidance for third-quarter deliveries on Monday, saying it can’t get enough microchips. Li now expects to deliver about 24,500 vehicles in the third quarter, down from the roughly 25,500 vehicles it had previously expected.
Shares fell more than 5% in premarket trading. Still, guidance isn’t the stock’s biggest problem. Li and other stocks fall due to a highly indebted real estate developer
(ticker: 3333.Hong Kong).
Evergrande is having trouble paying his bills. That’s bad news for lenders with tens of billions of dollars in debt. Investors are concerned about the fear that bankruptcy could affect banks and credit markets.
Evergrande shares are at a new 52-week low on Monday. Shares are down nearly 90% from their October 2020 52-week high of over $20 a share.
European stocks fell about 2% in overseas trading Monday. Hong Kong
Hang Seng Index
decreased by 3.3%.
Dow Jones Industrial Average
futures were down about 1.3% and 1.6% respectively.
The chip shortage hasn’t hit auto stocks that much this year, though it has curbed global auto production. About 10 to 15% of the cars companies plan to build in 2021 will not be built.
(F) stocks, for example, are up 54% so far. Fewer cars were sold, but prices were exceptionally high, boosting profitability for automakers.
For Li and his colleagues, the demand for electric vehicles was high. Citigroup analyst Jeff Chung recently wrote that China’s electric vehicle sales grew 202% year-on-year in August. China’s electric vehicle sales are about 1.6 million units in the first eight months of 2021, an increase of about 221% from the comparable period in 2020.
The mix of chip and Evergrande news has shares of Li peers
(XPEV) also a hit. The NIO share fell by about 4% in premarket trading. XPeng shares are down about 4.5%.
Year-to-date, NIO and XPeng shares are down about 23% and 9% respectively, while Li shares are up about 1%. That performance was disappointing as electric vehicle sales in China boomed. A host of other issues, including rising interest rates, the Chinese crackdown on US-listed companies such as
(DIDI) and Evergrande have all weighed in on stocks.
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