Nio, Xpeng Take Twice As Long As Tesla To Pay Suppliers: What's Ailing Chinese EV Makers?
Chinese EV makers Nio Inc (NYSE:NIO) and Xpeng Inc (NYSE:XPEV) are reportedly taking over 200 days to pay their suppliers, more than twice their larger rival Tesla Inc (NASDAQ:TSLA).
What Happened: While Nio took around 295 days to clear its receipts as of the end of 2023, XPeng took 221 days, Bloomberg reported. The time taken has ballooned significantly from 2021 when Nio took 197 days and XPeng took 179.
Tesla, in comparison, took around 101 days, the report said, while adding that the time taken has remained mostly stable for the past three years.
Why It Matters: Both Nio and Xpeng have been struggling to achieve profitability. In 2023, XPeng reported a net loss of 10.38 billion yuan ($1.44 billion), up from 9.14 billion yuan ($1.26 billion) in 2022.
Nio, meanwhile, reported a net loss of 20.72 billion yuan ($2.86 billion), up from 14.44 billion yuan ($2 billion) in 2022, despite revenues and vehicle deliveries increasing.
This is largely because of the companies’ falling profit margins, which have been under pressure since the companies started lowering prices in a bid to retain market share amid rising competition and slowing economic growth.
In 2023, Xpeng’s full-year gross margin was 1.5%, marking a decrease of 10 percentage points year-over-year. Nio meanwhile saw its gross margin dip to 5.5% in 2023 from 10.4% a year earlier.
Price Action: NYSE-listed shares of Nio dropped about 37% year-to-date to close at $5.28 on Friday. Xpeng’s shares on the exchange, meanwhile, have dropped nearly 41% year-to-date and closed at $8.3 on Friday, according to data from Benzinga Pro.
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