• Li Auto suffers from lack of chips
• Delivery forecast for the third quarter of 2021 screwed down
• Difficult environment also puts other e-car manufacturers under pressure
The car market remains under pressure due to the shortage of chips. Even before the corona crisis, semiconductor manufacturers were faced with growing demand, which can be attributed to the increasing importance of the EV market worldwide. The corona crisis did the rest to put additional strain on the already scarce supply with production stoppages and interruptions in the supply chains.
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Corona crisis continues to weigh on
The fact that the danger posed by Corona for automakers has still not been averted became clear once more recently when the Chinese electric high-flyer Li Auto was forced to revise its forecast for deliveries in the third quarter of 2021 downwards. Specifically, the carmaker named the current effects of the corona pandemic on Malaysia as the cause in the associated press release. Instead of 25,000 to 26,000 deliveries, the company is now targeting only 24,500 vehicles. In addition, Li Auto informed that they would like to continue to monitor the chip situation closely and work closely with their own suppliers so that further negative effects on vehicle production can be minimized.
Lower forecast puts pressure on Li Auto shares
The news did not go down well with investors: The Li Auto share ultimately slumped 7.5 percent on the NASDAQ on the reporting day to $ 26.91 and pulled other EV manufacturers down with it. In terms of the whole year, too, things are not looking good for the EV manufacturer’s paper. Since the beginning of the year, Li Auto’s share has already lost 9.43 percent. In the last three months things went even more downhill, with a discount of over 25 percent.
The market for electric vehicles in the People’s Republic remains strong. As Forbes explains, the number of electric vehicles delivered in August 2021 rose by a whopping 200 percent to 249,000 units compared to the previous year.
Increased regulatory risks
The fact that the Chinese e-vehicle manufacturers are currently facing difficulties is not only due to the ongoing chip crisis, but is also caused by a difficult regulatory environment. The Chinese Minister for Industry and Information Technology recently said that the country had “too many” EV companies, as Forbes writes. Large technology and Internet companies have already struggled with strict regulatory requirements this year, which is why market observers fear that more restrictions could also threaten electric car manufacturers.
Evergrande crisis is an additional burden
In addition, China is currently burdened by the crisis of the Chinese real estate giant Evergrande. The company has amassed $ 300 billion in debt and is unable to pay the interest on its loans. For this reason, investors are concerned that the real estate giant could go bankrupt and thus also burden the Chinese banking system, which in turn fuels fears of a renewed financial crisis.
Given this challenging position, it’s no surprise that Li Auto isn’t the only Chinese EV company to lower its guidance for the third quarter. Tesla rival NIO announced at the beginning of September that it would reduce its delivery target for the current quarter from 23,000 to 25,000 vehicles to 22,500 to 23,500 units.
To what extent the situation for electric car manufacturers in China will improve in the near future cannot be foreseen at the moment. As Forbes points out, however, Li Auto investors should be comforted somewhat by the fact that the current problems are not due to structural weaknesses. However, when the recovery begins depends to a large extent on the further development of the corona pandemic.
Finanzen.ch editors
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