Li Auto warned that the “supply chain constraint” will mean the company will deliver fewer cars than expected in the third quarter. Meanwhile, China has extended a tax exemption for new energy vehicles until the end of 2023 as it seeks to boost the growth of electric cars.
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Shares of Li Auto fell in premarket trading in the United States on Monday after the Chinese electric carmaker cut its third-quarter delivery forecast.
Meanwhile, rival electric car companies Nio and Xpeng surged when 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, down from a previous forecast of between 27,000 and 29,000 units. Shares of Li Auto were down about 2% in premarket trading.
“The overhaul is a direct result of the supply chain constraint, as underlying demand for the company’s vehicles remains robust,” Li Auto said in a statement. “The company will continue to work closely with its supply chain partners to resolve the bottleneck and ramp up production.”
Chinese electric carmakers have faced a number of headwinds stemming from a resurgence of Covid-19 and Beijing’s continued 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 maintain the growth of electric cars, China’s Ministry of Industry and Information Technology and Ministry of Finance have extended the period that new energy vehicles will be exempt from purchase tax until as of December 31, 2023. New energy vehicles include all-electric vehicles as well as -in hybrid cars.
Beijing has repeatedly extended the shopping tax exemption since the policy was first introduced in 2014 in a bid to stimulate demand. Along with other incentives, the policy has helped make China the biggest market for electric vehicles in the world.
Shares of Xpeng rose more than 4% in premarket trading, while Nio rose around 1.6%.
Even though the market is facing challenges, Chinese electric car startups continue to launch new products this year to drive growth.
Last week, Xpeng launched the G9 sport utility vehicle, its most expensive car to date, to move into the high end of the market. Li Auto will unveil a new SUV called Li L8 on Friday with deliveries expected to begin in November.