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The supply chain shortage that’s causing a steep climb in raw material costs also resulted in EV price hikes. Tesla, for example, has been gradually increasing its price since September 2021. The more significant price raise towards the end of 2021 has caused major slow down in orders for Tesla in January 2022, though the most recent Sandalwood China Payment data saw a quick recovery – whether this indicates the acceptance of the price raise by Chinese consumers remains to be seen. 

Meanwhile, Tesla launched a cheaper Model Y Standard Range RWD in China in July 2021 that led to strong order flows as observed in Sandalwood China Payment and Email Receipt data. The momentum was largely sustained to the year end, creating a huge backlog of domestic orders which supported 4Q21’s strong delivery. The effect will likely continue into 1Q22 as well.

Tesla’s advanced technology and maneuverability have potentially led to lesser price sensitivity. However, the company does not plan to roll out new models in 2022 given supply chain shortage, leaving a chance for competitors. Equally well-known for innovation, high-tech experience (e.g Autopilot), and good design, Xpeng realized aggressive growth in 4Q21 mostly contributed by P7 and the newly-launched P5 models. It is also worth mentioning that the launch of Xpeng’s new G9 model targeted for delivery in 3Q22 will officially open the door for Xpeng to enter the EV SUV market, placing the company in direct competition with Tesla Model Y. 

Another leader in the SUV space is Li Auto. Li Auto is able to concentrate all its resources including R&D, production, sales and promotion on Li One, the only model on sale, making it a top selling SUV model in China. The company, however, is expected to add a new model, Li X01 to its product portfolio in 2022 for the first time – and its performance will be monitored through Sandalwood China Payment data. Whether Li Auto sustains future growth in the market is largely dependent upon its ability to copy Li One’s success for the new models.

Diversification is also at the core of Nio’s business strategy for 2022 – although the company’s outdated hardware and functionalities, and its inability to adjust to supply chain shortages compared with other players are majorly limiting its growth potential. Moreover, the high price set by Nio limits its market potential and targeted customer group to consumers in the higher-income group. In response to the declining sales in 4Q21, Nio is set to launch 2-3 new models in 2022, the performance of which would be closely monitored.

In contrast to Nio’s high price, BYD adopts a lower price strategy aiming to target the mass market (ASP for Nio, Li Auto, Tesla, Xpeng, BYD is around 400k, 310k, 286k, 213k, 150k RMB respectively), placing BYD on top of the market in delivery units. The company’s break-through in its self-owned battery technology and innovation in its hybrid vehicle models also provide natural advantages, allowing BYD to outsell the other key players.

With more conventional vehicle manufacturers like BYD venturing into the EV space in China,  the competition has become tighter. Meanwhile, global supply chain shortages are expected to last well into 2022. Whether the top five players are able to sustain and keep their market share as they try to outperform each other in an increasingly complex market condition remains to be seen – and closely monitored.

Sandalwood Advisers helps institutional investors generate alpha on EV stocks through tracking the companies’ sales on a real-time basis. Please contact service@sandalwoodadvisors.com for a demo on latest data and insights