Insights

Xpeng delivered better-than-expected third-quarter operating results, accompanied by a slightly better-than-feared outlook.

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

Edison Yu's team predicts Nio will deliver 13,500 units in November and 19,500 units in December.

Industrial Securities believes that Xpeng's short-term model changeover and sales pressure will not affect the company's long-term value.

For most of the best-selling electric vehicle models, the amount of subsidies as a percentage of the selling price is only 4-11 percent this year, CITIC Securities said.

Edison Yu's team expects China NEV sales momentum to pick up in November and December, when a host of new models should drive sales to new highs and NEV subsidies are poised to exit.

"Our gross margin is meaningfully higher as we believe Nio will recognize the majority of its regulatory credit sales in 3Q, similar to last year," writes Deutsche Bank analyst Edison Yu's team.

Deutsche Bank analyst Edison Yu's team expects several new product cycles to drive sales up in November and December, and sales should also broadly benefit from NEV subsidies that expire at the end of the year.

Some buyers would naturally be concerned about the residual value of a new brand, and a monthly subscription option allows customers to try out the cars, according to Edison Yu's team.

SUV competition in China's premium segment will intensify dramatically next year, with Nio, Xpeng and Li Auto all aggressively going after German luxury brands' market share, said Edison Yu's team.