What happened
Tesla's (TSLA +3.25%) surprise earnings beat last night was shaking up the electric vehicle (EV) industry this morning, as shares of solid-state batteries researcher QuantumScape (QS +0.64%) tumbled 1.5% through 11:15 a.m. ET, but Tesla's Chinese rivals Nio (NIO 0.58%) and Xpeng (XPEV 0.82%) gained 2.7% and 3.4%, respectively.
Tesla surprised investors by reporting $1.19 per share in profits on sales of $24.3 billion -- beating on both the top and bottom lines despite cutting prices on its electric cars over the past couple months. But that wasn't all Tesla told us last night.
NYSE: NIO
Key Data Points
So what
Of particular note, Tesla told investors that demand for its cars is increasing as its prices decrease, to the extent that the company now expects to beat its earlier projections for 50% volume growth in 2023 and sell "around 1.8 million cars." This seems to confirm what Morgan Stanley predicted yesterday, that the EV market is changing and that both shoppers and investors are gravitating toward companies that can supply products quickly.
Good news for Tesla, which is "swamped" with new orders, according to a note from Piper Sandler last night, and churning out cars rapidly to meet the demand. Bad news for QuantumScape, which won't have anything at all to sell before next year and won't be selling appreciable quantities of batteries before 2026 at the earliest, according to analysts polled by S&P Global Market Intelligence.
The other big reveal about Tesla last night -- of special relevance to Nio and Xpeng, at least -- didn't actually come from Tesla per se, but from the South China Morning Post, which does a lot of local reporting on the company's China operations. Tesla "no longer has plans to increase the capacity at its Shanghai Gigafactory after seeing weakening demand," said the publication (according to The Fly, which also reported on the story). While Tesla may be increasing production of batteries for its cars in Nevada, and preparing to start churning out Cybertrucks in Texas this year, it is ratcheting back expansion plans in China.
Now what
That news may not affect QuantumScape very much, but it could be very important to Nio and Xpeng.
Earlier this month, Nio reported a 51% year-over-year improvement in December EV deliveries. At the same time, Xpeng announced that its electric car deliveries nearly doubled in December versus November. While not apples-to-apples comparisons, both reports suggest that Nio and Xpeng are taking market share from Tesla in China. And rather than let up the pressure, Xpeng is pressing even harder on the gas, announcing last week that it will cut prices on its cars to prevent Tesla undercutting it with its own price cuts.
In short, depending on which electric car stocks you're investing in, there's more than enough good news to go around. In China, Nio and Xpeng appear to be doing just fine in their competition with Tesla. Meanwhile, Tesla itself is also performing well, cutting prices to boost demand and beating earnings estimates regardless.
It really looks like everybody's a winner today ... everybody but QuantumScape, that is.
