Tesla, Chinese Rivals NIO, XPeng and Li Auto Dealt a Major Blow

Tesla dominates the electric vehicle market. 

Although the market share of Elon Musk’s group has declined in recent years as most legacy carmakers now offer electric models, the manufacturer of the Model Y and Model S remains the benchmark for green vehicles.

You just have to see that the upstarts are trying to position themselves to align with Tesla  (TSLA) – Get Free Report. They all dream of becoming the new Tesla, and to do this’ they aspire to mount a tough opposition to their elder. This is the case of NIO  (NIO) – Get Free Report and other Chinese groups such as BYD and Xpeng  (XPEV) – Get Free Report, which also take advantage of tax credits and other aid from the Chinese government to make life difficult for the American vehicle manufacturer in their local market, considered the largest automobile market in the world. world.

Canadian Pension Fund Reduces Tesla Stake 

The determination of Chinese vehicle manufacturers has thus enabled them to become formidable rivals to Tesla. This rivalry extends into investors’ portfolios. This is the case of the Canada Pension Plan or CPP Investments.

Its portfolio includes Tesla, NIO, Xpeng and Li Auto shares. 

As of June 30, the Canadian pension fund held 230,061 Tesla shares. This increased to 690,183 after Tesla finalized a three-for-one stock split on August 25. 

But three months later, CPP Investments has significantly reduced its holdings, owning 368,867 Tesla shares as of September 30, according to a regulatory filing. This means that the Canadian fund slashed almost half of its Tesla stake in the third quarter.

Tesla’s stock price has lost 45% of its value this year. The fundamentals of the company are very solid. For the third quarter, Tesla posted adjusted earnings before interest, taxes, depreciation and amortization of almost $5 billion, up 55% year-over-year, while revenue jumped 56% to $21.5 billion. 

Tesla delivered 907,573 vehicles in the first nine months of 2022, up 45% year-over-year, and produced 927,910 cars, up nearly 49%. 

The Canadian pension fund was tougher on Chinese electric vehicle makers NIO, Xpeng and Li Auto. It sold virtually all its stake in these three companies in the third quarter.

CCP Slashes Chinese Stakes

CPP reduced its NIO American Depository Receipts (ADRs) to 90,740 at the end of the third quarter, according to a regulatory filing. This represents a reduction by 2.8 million ADRs.  The Canadian fund sold 1.4 million Li Auto ADRs during the third quarter, and holds only 1,352 Li Auto ADRs as of September 30. 

Finally, CPP ceded 971,113 XPeng ADRs during the same period. Its stake now is 2,087 ADRs.

The Canadian group does not explain the reasons for these liquidations, but the prices of the ADRs of the three manufacturers of electric vehicles fell in 2022. The ADRs of NIO are down by 58.6%, the ADRs of Li Auto are down by 29% and Xpeng’s ADRs lost 77.3%.

It would seem that the Canadian fund is no longer confident in the performance of these stocks in the short term. This strategy contrasts with that of billionaire George Soros, who has increased his stake in Tesla and continues to embrace NIO.

Stock market regulations require managers of funds with more than $100 million in U.S. equities to file a document, known as a 13F, within 45 days of the end of the quarter, to list their holdings in stocks that trade on U.S. exchanges.