EV Stock NIO and XPeng Reported Impressive Deliveries. Why That’s Bad News.

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April deliveries from Chinese electric vehicle makers

NIO

and

XPeng

offer investors some reason for hope and some reason for concern.

The pair reported April delivery figures over the weekend. NIO (ticker: NIO), for its part, reported it delivered 7,102 vehicles, up 125% year over year. The year-over-year change, however, doesn’t matter. NIO is a high-growth company and has been adding capacity rapidly. Deliveries were at about the same level as recent months. NIO delivered 7,257 vehicles in March.

Current manufacturing capacity is about 7,500 vehicles a month, but production hasn’t been able to hit that level because of the global semiconductor shortage roiling the automotive industry.

The 7,100 figure puts NIO on track to hit is second quarter delivery guidance of roughly 21,000 vehicles given this past week when the company reported stronger than expected first-quarter numbers. That’s a positive. Still, management said on their earnings conference call that the chip shortage was expected to get worse in May, leaving investors some lingering concern over how deliveries will develop in the final two months of the quarter.

XPeng (XPEV) reported deliveries of 5,147 vehicles in April. That, like those of NIO, is a huge year-over-year increase. XPeng delivered 5,102 vehicles in March, but month-to-month deliveries are flat while the semiconductor shortage persists.

XPeng hasn’t reported first quarter numbers yet. It’s slated to do so on May 13. There isn’t any second quarter delivery guidance for investors to weigh. The company’s news release included a rundown of recent announcements including the use of lidar sensors to enhance autonomous driving features and new battery chemistries that will help reduce vehicle cost. But it didn’t mention the chip shortage.

Going into Monday trading, the news is likely good enough for both stocks. There is no negative surprise hidden in either press release.

Shares of both companies have had a roughly ride so far in 2020. High valuation, new EV competition in China and the chip shortage have all conspired to hurt investor sentiment. XPeng shares are down about 30% this year, far worse than comparable gains of the

S&P 500

and

Dow Jones Industrial Average.

NIO stock is down about 18% this year.