, , and , the three new carmakers in China, have all recently delivered impressive third-quarter results.

According to their financial reports, the gross profit margin of these three companies have all turned positive, and their car sales have increased significantly, which means that they seem to have ushered in the harvest season.

In the reshuffle of the domestic new energy vehicle market, Nio, Li Auto, and Xpeng stand out and have become the backbone of the first camp of new car-making forces in China.

Gross margin turning positive

For Nio, Li Auto, and Xpeng, the best news is the positive gross margin, which means they are one step closer to their dream of making profits.

On November 18, Nio released its financial report, which shows that its total revenue for the third quarter was RMB 4.526 billion, with a gross margin of 14.5% and a combined gross margin of 12.9%, exceeding market expectations.

Nio's founder William Li Bin had previously stated that its gross margin target for the second half of 2020 was to achieve a double-digit gross margin on vehicle sales and consolidated gross margin. The release of the latest financial results means that Nio has achieved this goal.

Xpeng, the bottom performer in terms of gross margin, also achieved a 4.6 percent gross margin in the third quarter, which Xpeng said was due to lower material costs and improved manufacturing efficiency.

Li Auto's gross margin was 19.8 percent, up 6.5 percentage points from 13.3 percent in the second quarter and the highest of the big three.

Li Auto's gross margin has remained positive since delivery. In the third quarter of this year, Li Auto's gross margin is not only ahead of Nio and Xpeng, but also starting to catch up with 's 23.5%.

The increase in the gross margin shows an enterprise's ability to control products, costs, and operations, which is one of the criteria for corporate profitability.

In this regard, some in the industry have boldly predicted that Li Auto may be the first Chinese new energy vehicle startup to achieve profitability.

In addition to gross margin, cash flow is also an important indicator of a company's financial health. As of the end of the third quarter, the cash reserves of these three giants were RMB 22.2 billion, RMB 19.998 billion, and RMB 18.916 billion, respectively.

Although Nio, Li Auto, and Xpeng's revenue, gross margin, and cash flow were all good in the third quarter, they still suffered heavy losses and still have a long way to go to achieve profitability.

Who is more popular with consumers?

The significant improvement in gross margin for the big three is closely related to higher quarterly deliveries and further cost reductions due to economies of scale.

In terms of delivery data, the Nio is leading the trio in terms of sales volume, driven by two hot-selling models, the Nio ES8 and ES6, with a total of 31,430 units delivered from January to October.

EC6 deliveries only started in September this year, and there is still uncertainty as to whether it will be popular with consumers in the future.

Although Li Auto is the last of the big three to deliver, the Li ONE has had three consecutive quarters of positive growth since it was delivered, and Li Auto delivered 21,852 vehicles in January-October.

From September to October, the Li ONE was the No. 1 selling SUV in China for two consecutive months, showing the potential of the Li ONE market.

However, according to Li Auto's current product plan, until 2022, Li Auto will have to rely on Li ONE to compete in the market, which is a lot of pressure.

In contrast, Xpeng's performance this year is a bit weak; Nio and Li Auto are high-end models, while Xpeng's price is low, but the price advantage does not bring a significant increase in sales.

Xpeng delivered a total of 17,117 vehicles from January to October, and Xpeng was overtaken by Li Auto, which delivered the entire vehicle in 2018.

However, after the launch of Xpeng P7, the situation has improved. Xpeng delivered a total of 8,578 vehicles in the third quarter, and P7 sales accounted for 72.4% of the total, which was the main factor of Xpeng's significant year-on-year revenue growth.

Although the delivery volume of these three giants is steadily increasing, it is also a fact that their rival, Tesla, has penetrated deep into the Chinese market. A total of 81,000 units were delivered in China alone from January to October, giving Tesla the absolute leading position in the market.

Tesla's production capacity is also increasing at an astonishing rate. A recent media report said that Tesla's Shanghai Phase II factory is expected to achieve its production capacity target by the end of this year when the annual production capacity of the Shanghai factory will reach 500,000 units.

On October 1, Tesla announced another price reduction, lowering the price of the entry-level Model 3 to 249,900 RMB after subsidy.

According to Tesla's financial report, the production cost of the Model 3 line in the Shanghai factory was reduced by nearly 65% compared to the US factory, which is the reason why the domestic Model 3 is able to keep lowering its price.

Tesla models may also keep dropping in price in order to increase their share and undermine the competition, which will put a lot of pressure on the new Chinese carmaker that is also taking the high-end new energy vehicle brand.

Whether it's the Xpeng P7, Li ONE, or Nio's ES8 and EC6, their prices overlap with or are higher than those of the China-made Tesla Model 3.

In addition, the Han with blade battery is also performing well.

With a price range of RMB 229,800 to RMB 279,500, the Han, which is priced between RMB 229,800 and RMB 279,500, had more than 10,000 orders after five days on the market and more than 30,000 orders in its first month.

For Nio, Li Auto, and Xpeng, they not only have to face competition from Tesla, but also from local competitors such as BYD. However, it is worth noting that German luxury car companies such as Mercedes-Benz, BMW, Audi, and others have not been able to launch good competing products in a short period of time.

The China Passenger Car Association (CPCA) released a list of China's top 10 new energy vehicle sales in October, and only the Li ONE made the list, ranking 8th.

Nio does not appear on the list, and the main reason may not be due to Nio, but rather to the rapid growth of its rivals.

Each has its own competitive advantage

Wang Xing, the founder of China's online-service super-app Meituan, once said that only three new car-making forces can survive in China in the future, namely Nio, Li Auto, and Xpeng.

These three giants have their own competitive advantages and focus on competing for the new energy vehicle market segment.

In terms of market positioning, Nio intends to capture the traditional luxury gasoline car market, and its main models ES8 and EC6 are priced above 350,000 RMB.

The Li ONE is a large SUV with three rows of seats and is positioned as a family car.

Xpeng's current models are the Xpeng G3 and P7, priced between RMB 100,000 and RMB 350,000, which are more oriented to the young group.

In terms of technology lines, Nio focuses on charging and battery swap development, Xpeng focuses on smart and autonomous driving, and Li Auto is working on digital information transmission and battery technology.

Nio is accelerating the development of its second-generation technology platform NT2.0, and its first model will be a sedan, which will be released soon.

It was also previously reported that Nio is planning to build its own automated driving computing chip. If Nio carries its own chip on the NT2.0 platform, it will be the first new car maker after Tesla to test the waters of in-vehicle chips, and its sales will hopefully be further boosted.

In addition to the quality of the vehicle itself, customer service is equally important. Nowadays, good service has become an Nio label.

In terms of user's battery swap rights, Nio not only launched a program that allows 6 free battery swaps per month without affecting the rights and benefits of existing users but also launched a BaaS model. It also launched a BaaS model to realize the separation of body and battery, reduce the cost of car purchase, and solve the three major problems of new energy vehicles: high price, easy to decay range, and fast depreciation.

In September, Xpeng also launched the Supercharger free charging program, which is expected to be implemented in no less than 60 cities by the end of this year. By the end of September, Xpeng has 135 Supercharging stations in operation, covering 50 cities.

Li Auto's focus on extended-range technology is intended to eliminate users' range anxiety, and Li Auto has a clear advantage in this area, so it was able to open the market sooner.