XPeng (HK: 09868) (NYSE: XPEV) and Nio (SGX: NIO) (NYSE: NIO) stocks are down an almost equal 9%. The trigger for this is XPeng's recent Q1 results which show a near 50% plunge in revenue YonY. If that's what hits one EV maker aiming largely at the Chinese market then why not write down the prospects of another China EV maker by the same amount? That is, at this point, roughly the thinking. XPeng is having a bad time of it so therefore Nio might too.
It is necessary though to grasp that there could be one of two effects going on here. One is that the market as a whole is perhaps sated - the people in China who are going to buy an EV at the current level of tech and pricing have largely done so already. Or, there's the other possibility that other EV makers - say TSLA and BYD - are eating XPeng's lunch. As ever in economics it's likely that there's more than just a little of both explanations there. But what matters is to work out which is dominant. For competition effects may or may not affect Nio - and TSLA or BYD - while general market effects will affect all four.
XPeng share price from Hong Kong Stock Exchange
Nio share price from Singapore Stock Exchange
It's important to work this out. Some think XPeng's problem is demand. Well, that's always a problem of course. But is it demand for the idea of an EV? Or for the specific EVs that XPeng is trying to sell? It's entirely true that they've got an entirely new model just launching. So, we might find out that it's specific models that aren't wanted, not EVs in general.
So, it is possible to read this as just being XPeng specific. In which case the Nio stock price will presumably recover. We could also surmise that both Nio and XPeng are suffering as a result of the price war between BYD and Tesla. But then there's that third option, that all of them are facing falling demand for that basic item, the EV.
This is the problem with major technological changes. We're never really sure how it's going to work out. Selling on the internet didn't work out so well for Pets.com, it did absolutely great for Amazon. The technology required was fine, it was the implementation of it that mattered. One the other hand the buggy whip industry really did disappear - who did it better was an irrelevance.