At the end of 2023, Nio was taking about 295 days to clear receipts payable, and Xpeng 221 days, compared with 197 days and 179 days, respectively, in 2021, according to Bloomberg.
The time it takes some Chinese electric vehicle (EV) makers to pay their suppliers has been increasing over the past few years, a latest report said.
At the end of 2023, Nio (NYSE: NIO) was taking about 295 days to clear its receipts payable, the vast majority of which are owed to suppliers, compared with 197 days in 2021, according to a Bloomberg report today.
Xpeng (NYSE: XPEV) was taking 221 days to fulfill its obligations to vendors and related parties, up from 179 days, according to the latest data compiled by Bloomberg.
By comparison, Tesla (NASDAQ: TSLA) only takes about 101 days, and that time has remained largely stable over the past three years, according to the report.
The extended of payment cycles is a sign of the pressure many automakers are facing in China, where economic growth remains sluggish and consumer sentiment is subdued, the report noted, adding that this translated into reduced demand for EVs, and that the once fast-growing market is now facing fierce price wars and crunched profit margins.
For manufacturers, price cuts mean less money coming in, and as a result, the money they owe their suppliers may be necessary for them to remain liquid, the report quoted Jochen Siebert, managing director of consultancy JSC Automotive, as saying.
Delayed payments are starting to have a knock-on effect on auto parts suppliers.
"Tier-three or four suppliers really get bitten, because they can't pass it on," Siebert said, adding that the EV sector may see a "messy consolidation" as suppliers go bankrupt, which could quickly create production issues for automakers.
China's EV industry was growing at a rapid pace in 2021-2022, with demand overwhelmingly higher than capacity. By 2023, however, many EV makers began to face weak demand.
Nio delivered 91,429, 122,486, and 160,038 vehicles in 2021-2023, with year-on-year growth rates of 109.09 percent, 33.97 percent, and 30.66 percent, respectively, according to data compiled by CnEVPost.
Xpeng's deliveries in those three years were 98,155, 120,757, and 141,601 vehicles, with year-on-year growth rates of 262.99 percent, 23.03 percent, and 17.26 percent, respectively.
As of the end of 2023, Nio's cash and cash equivalents, restricted cash, short-term investments and long-term deposits balances amounted to RMB 57.3 billion ($7.9 billion), and Xpeng's amounted to RMB 45.70 billion, according to their financial reports.
($1 = RMB 7.2309)
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