Chinese EV Stocks Nio, Li Auto, Xpeng Plunge Amid Sales Drop and Beijing's Profitability Push.

Chinese EV makers Nio, Li Auto, and Xpeng stocks are down after the country's first month-on-month decline in EV sales since May. Despite a 27.4% YoY increase in sales, a push for automakers to scale back discounts and focus on profitability has led to a 5% drop in July sales. Profits are only seen in BYD, Li Auto, and Huawei-backed Aito. Fitch Ratings expects demand to soften until September, but rebound in the fourth quarter.

Title: Chinese EV Makers Face July Sales Decline Amid Profit Focus

Chinese electric vehicle (EV) makers have seen a significant drop in sales in July, marking the country's first month-on-month decline since May. Despite a robust year-over-year (YoY) increase of 27.4% in sales, the industry has experienced a 5% drop in July sales. This decline is attributed to a strategic shift by automakers to scale back discounts and prioritize profitability.

According to the China Passenger Car Association, Tesla's sales of China-made electric vehicles decreased by 8.4% in July compared to the same month last year [2]. This reversal from a slight increase in June comes amid rising competition from lower-priced rivals. Tesla's deliveries of the China-made Model 3 and Model Y vehicles totaled 67,886 units in July, a 5.2% decline from June's figures. Top Chinese rival BYD reported nearly stable global passenger car sales of 341,300 vehicles in July [1].

Chinese automakers like Xpeng and Nio are also facing challenges. Nio's stock price has been affected by the decline in sales, with the company reducing its reliance on Nvidia chips and developing its own semiconductor technology. Similarly, Xpeng has been working on its in-house Turing chip for smart driving [3].

Li Auto, another major player in the Chinese EV market, has seen its stock holdings increase among institutional investors. Connor Clark & Lunn Investment Management Ltd. has increased its stake in Li Auto by 2.5%, now holding 418,992 shares valued at approximately $10.56 million [4]. Despite the recent decline in sales, Li Auto reported a revenue of $3.53 billion for the quarter, exceeding expectations with a year-over-year increase of 1.1%.

Fitch Ratings expects demand to soften until September but anticipates a rebound in the fourth quarter. This outlook suggests that the current focus on profitability may temporarily affect sales but could lead to sustained growth in the long term.

References
[1] https://www.autonews.com/china/an-china-2025-july-shipment-export-ev-increase-0811/
[2] https://brandequity.economictimes.indiatimes.com/news/business-of-brands/teslas-china-made-ev-sales-drop-8-4-in-july-amid-rising-competition/123135318
[3] https://www.benzinga.com/markets/tech/25/08/46896066/nio-xpeng-lead-chinas-push-to-ditch-nvidia-chips
[4] https://www.marketbeat.com/instant-alerts/filing-connor-clark-lunn-investment-management-ltd-has-1056-million-stock-holdings-in-li-auto-inc-sponsored-adr-nasdaqli-2025-08-11/