Chinese EV maker Li Auto falls after it cuts delivery outlook; Beijing extends tax breaks for electric cars

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  • Li Auto said it now expects to deliver 25,500 vehicles in the third quarter, up from the previous outlook of between 27,000 and 29,000 units.
  • Lee Auto said the forecast cuts are “a direct result of a supply chain disruption”, but said demand for its vehicles remained “strong”.
  • Meanwhile, China announced an extension of tax breaks for electric car purchases, pushing Nio and Xpeng shares higher.

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Shares of Li Auto fell in US pre-market trade on Monday after the Chinese electric carmaker cut its distribution guidance for the third quarter.

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Meanwhile, rival electric car companies Nio and Xpeng jumped as Beijing announced an extension of tax breaks for electric car purchases.

Li Auto said it now expects to deliver 25,500 vehicles in the third quarter, up from the previous outlook of between 27,000 and 29,000 units. Shares of Lee Auto were down about 2% in pre-market trade.

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“The revision is a direct result of supply chain disruption, while underlying demand for the company’s vehicles remains strong,” Lee Auto said in a statement. “The company will continue to work closely with its supply chain partners to resolve the bottleneck and accelerate production.”

China’s electric car makers have faced several headwinds stemming from the resurgence of COVID-19 and Beijing’s strict lockdown policy to contain the virus. This “zero-Covid” policy has caused supply disruptions at factories across China and put pressure on the economy and consumer spending.

To help keep up with the growth of electric cars, China’s Ministry of Industry and Information Technology and the Ministry of Finance have extended the period that new energy vehicles will be exempt from purchase tax until December 31, 2023. New energy vehicles include fully electric as well as plug. In hybrid cars.

Beijing has extended purchase tax exemptions on several occasions since the policy was first introduced in 2014 to spur demand. Along with other incentives, the policy has helped make China the world’s largest electric vehicle market.

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Shares of Xpeng were up over 4% in pre-market trade while Nio was up about 1.6%.

Even as the market faces challenges, China’s electric car startups continue to launch new products this year to fuel growth.

Last week, Xpeng launched the G9 sports utility vehicle, its most expensive car ever, to push into the higher end of the market. Lee Auto on Friday will unveil a new SUV called the Li L8, with deliveries expected to begin in November.

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