Ford Is Coming for Tesla and NIO in China -- Barrons.com
DOW JONES & COMPANY, INC. 9:30 AM ET 4/14/2021
Symbol Last Price Change
XPEV 32.825down -2.655 (-7.4831%)
LI 20.965up -0.855 (-3.9184%)
F 12.295up +0.095 (+0.7787%)
QUOTES AS OF 02:58:56 PM ET 04/14/2021
Objects in the rearview mirror might be closer than they appear.
That's something Chinese electric-vehicle makers such as NIO , XPeng(XPEV) , and Li Auto(LI) should note: Ford Motor(F) wants a piece of their booming EV market.
Ford recently opened up orders in China for its all-electric Mustang Mach-E crossover vehicle. The Mach-E starts at about 265,000 yuan, or $41,000. That's roughly comparable to a Tesla (TSLA) Model Y. The NIO ES8 SUV and the Li ONE both start at higher price levels. Both the Mach-E and the Chinese-built Model Y are new in China in 2021.
Ford wasn't available to comment on preorders in China.
The car has been a success in the U.S. The company began ramping deliveries in the first quarter, and the car has been moving off dealer lots in about a week. That is an incredibly fast turnaround for car purchases.Sales have totaled about 6,600 vehicles.
U.S. EV sales are growing, but China is the largest market for EVs. All the major Chinese auto makers have EV offerings, and more are coming from start-ups as well as companies such as Ford.
Fears of rising competition might be one reason Chinese EV stocks are struggling in 2021. NIO, XPeng(XPEV), and Li shares are down about 21%, 17%, and 24%, respectively. BYD (1211.Hong Kong), another large EV player, is down about 12%.
Ford stock, on the other hand, is up almost 40% this year, buoyed by new EV offerings as well as the global economic recovery, which is boosting car sales in the U.S.
The Chinese EV stocks began to struggle in late January and early February as interest rates started to rise. The yield on the U.S. 10-year Treasury note rose about 0.6% from the end of January through the end of March.
Higher interest rates hurt high-growth stocks in two main ways. First, higher rates make financing growth more expensive. What's more, high-growth companies generate most of their cash flow far in the future. That cash is worth less, relatively speaking, when investors can earn higher yields on their cash today.
NIO, XPeng(XPEV), and Li all qualify as high-growth stocks. Their combined sales are expected to more than double in 2021, rising to about $10.4 billion from $4.8 billion last year.
Ford shares are down slightly in premarket trading. S&P 500 and Dow Jones Industrial Average futures are both flat.
Write to Al Root at allen.root@dowjones.com
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