March 2022
Dan Zhuang, Executive Director of Blue Lotus Research Institute, was interviewed by Bloomberg and expressed her views on the recent dynamics of Tesla, Xpeng, NIO and Li Auto. Although the NEV industry is facing challenges including rising raw material prices and COVID-19, we maintain optimistic about Li Auto, Xpeng, and NIO.

Q: Tesla is suspending the production in its Shanghai factory to Thursday as half of the city locks down. The factory produces cars for the Chinese market but also exports to other Asian countries as well as to Europe. Let's bring in Blue Lotus analyst Dan Zhuang for more analysis on the impact. So it is obviously a temporary production pause, but how do you quantify the impact when it comes to output？
Dan: It's about four days and the Shanghai factory ha also suspended production about two weeks ago. So plus together, that’s 6 days in March. So basically put together, the total impact would be about 15k units. which is about 20% of Tesla’s February delivery in China, so for March, the impact is around 20% on the capacity of its Shanghai factory,
 
Q: Okay. So it is sizable, even if it's just a few days for the lockdown. We also had Xpeng reporting 4Q21 results, which were pretty much in line with expectations. The stock has been so beaten down, what’s your comment especially when it comes to the 4Q results and the number of high deliveries?
Dan: I think for this year, investors put more focus on the GP margin, especially as the battery cost increases and also the commodity prices. So I think the concern is that they just increased their price and demand seems a little bit slower after they increased the prices of their models. The battery cost will pressure the margin in the first quarter and second quarter. So I think the major concern is still if the company can manage their cost and also the margin in 2022. So probably that's a little bit different from last year, because last year we more focus on the delivery.
 
Q: So when it comes to competing in this very difficult environment, as you mentioned, rising raw material prices and other issues like the lockdown, who is better positioned, because we have many JVs and we have the local EV automakers as well.
Dan: I think probably Li Auto, because this company used to have a good management of their operation and their margin. Compared with the other two, Li Auto uses a different technology which is called EREV, so their batteries are relatively smaller, so less impact on its cost and the margin from the battery side.
 
Q: You also have a BUY rating for NIO, why?
Dan: I have BUY rating for all these three, NIO, Xpeng, Li Auto, because I think for this year, they still have a very strong model portfolio. NIO is going through new model cycle on their new platform NT2.0. They are about to deliver three models this year, including ET7 which began delivery in March 28, and ES7 & ET5. They are all exciting models. Next year, there will be also three new models coming, so they are going through new model cycle, with the volume increase being exciting this year and next year.