To The Moon

BYD announced its October sales today, with 217,816 units in a single month, another record high.

Other companies's October sales figures are as follows.

On November 1, China EV makers released its October sales data. One company is on the brink of collapse.

• $NIO Inc.(NIO)$ sold 10,059 units in October, up 174.3% year-on-year and down 7.5% sequentially.
• $XPeng Inc.(XPEV)$ October sales of 5,101 units, down 49.7 percent year-over-year.
• $Li Auto(LI)$ 's October sales of 10,052 units, up 31.4 per cent year-on-year and down 12.8 per cent sequentially.
• $ZHEJIANG LEAPMOTOR TECHNOLOGY CO., LTD.(09863)$ sold 7,026 units in October, down 36% year-over-year

After the release of October data, the shares of China's three new energy giants $NIO Inc.(NIO)$ , $Li Auto(LI)$ and $XPeng Inc.(XPEV)$ began to diverge.

$Li Auto(LI)$ jumped 10%, while $NIO Inc.(NIO)$ and $XPeng Inc.(XPEV)$ plunged 4% and 9% respectively.

data from tradingview

Why Li Auto's share prices diverge from other two competitors?

1) Successful layout

Although Li auto builds Extended Range Electric Vehicle, its model layout has been the most successful among 3 EV makes. Only one model, the Li auto one, has sold more than 10,000 units, the L9 has received rave reviews since realease, and new models like the L8 is coming.

2) good financial data

In terms of financial data, Li's gross margin is the highest, and it is also expected to be the first to achieve profitability and get rid of the history of seven consecutive years of losses.

3) forseeable growth

Based on Li's 28,687 sales and 8.73 billion revenue in the second quarter, the revenue per vehicle is about 304,400 yuan.

Assuming that monthly revenue of over 10 billion yuan is achieved during 2022, sales are expected to reach 32,851 units, a significant increase compared to the current monthly sales of 10,000.

Although the achievement of over 10 billion per month is an accumulation of orders from new product launches, it does give investors optimistic expectations. This also makes Li auto the first company among China's new energy giants to break 20,000 monthly sales.

In the fourth quarter of 2021, Li's revenue was 10.6 billion, and it achieved a net profit of 300 million in the same quarter. If the founder's prediction is true, Li's net income will be higher.

Bottom line

Having the ability to profit will become very important in the future. In October, $Tesla Motors(TSLA)$ took the lead in price reduction, with a maximum reduction of 30,000 yuan for single product, which may bring huge pressure on similar models.

At the same time, $BYD COMPANY(01211)$ sales continue to climb, the price band continue to increase to more than 300,000. China's new energy giants will face increasing competitive pressure.

Now the share prices of the three new energy giants have diverged:

• $Li Auto(LI)$ is favored by investors with the healthiest financial data ideal ;
• $NIO Inc.(NIO)$ is affected by the pandemic shutdown and sales are not yet optimistic;
• $XPeng Inc.(XPEV)$ has fallen behind and is under great pressure.