Earnings Preview

Gotion's earnings preview implies it will post a net profit of RMB 7,439 to RMB 124.4 million in the second quarter, a year-on-year increase of 129.46 percent to 283.68 percent.

BYD's earnings preview implies that its net profit for the second quarter will be RMB 6.37 billion to RMB 7.57 billion, up 128.56 percent to 171.62 percent year-on-year.

Deutsche Bank expects Nio to report soft results for the first quarter, with downside risk to margins, though some relief in on the way.

Xpeng's financial performance in the first quarter and its outlook for the second quarter will be weak, though the company may see a turnaround after the launch of G6, according to Edison Yu's team.

"We expect generally soft results and a weak 1Q23 outlook due to challenging demand and pricing dynamics," Edison Yu's team said.

Deutsche Bank believes the true test for Li Auto will come in the second half of the year.

Deutsche Bank's Edison Yu's team thinks Nio's performance will improve significantly in the second half of the year, but there's a big "IF" in it.

The sharp decline in gross margin was due to a huge hit of $803 million from inventory provisioning and loss of purchase commitments related to the accelerated phase-out of Li ONE.

"We expect a somewhat messy quarter due to accelerated phase-out of the Li ONE materially hurting margins," Deutsche Bank analyst Edison Yu's team said.

The key to Xpeng regaining relevance is winning back demand, and that could take several quarters, creating significant uncertainty heading into 2023.