Global EV Market Breakdown: TSLA, LI & XPEV Outlook

Added: 2026-05-30

[00:00:00]We're back on Morning [music] Trade Live. Macquarie has upgraded Xpeng to outperform from neutral and kept its price target at 19 bucks after its Q1 earnings report. The firm has also upgraded Li Auto to neutral from underperform. Here's today's price action mixed across our auto makers. Uh Xpeng is high by 1/4 of 1%. Li Auto is down 3.3 right now. So, going in opposite directions. We saw that yesterday post earnings. BYD is higher by almost half of a percent and Tesla is sinking today down 3%. But, it's been higher in recent sessions as well. So, let's go inside out on the global EV market. Joining us now is Tu Le, who's the managing director of Sino Auto Insights. Tu, so nice of you to join us and great to see you again. Just walk us through uh what is going on with some of these Chinese auto makers? I mean, obviously, um they're having a tough time in 2026. You can see that in the earnings. Um They're trying uh and you've seen it being reflected obviously in the sell-side analyst commentary. I mean, obviously with some of these upgrades here. But, they're still off double digits as far as the stocks are concerned year-to-date. What's going on?

[00:01:08]>> I So, first of all, we're only into Q1 of 2026, but it portends a a a tough year for most auto makers in China specifically. And I also want to point out that we should start to treat some of these car companies from a tech standpoint as because the refresh rate of their vehicles and their products is more like uh follows the tech sector than it does the traditional automotive sector. And it depends on when a refresh happens and when it hits. And that's what you're seeing with an Xpeng and a Li Auto. Li Auto is a little bit worrying because their margins got squeezed so uh severely. But, uh Xpeng looks like it's going to be doing pretty well come to Q2 Q3. So, >> Yeah.

[00:01:54]Let's talk about the title of two corporates in China because as you say, uh very different companies uh because of course Li Auto is catering to that sort of premium SUV type of market here, but Xpeng is kind of known as what like as headlines like to describe it the Tesla of China because it is looking to go sort of more robotic. What does that mean for the valuations here for some of these companies?

[00:02:17]>> So talking about it and being about it are two different things. I think where Xpeng is a little bit farther along than than Tesla is that they've shown some of these these new initiatives, the EVTOLs, the humanoids. And so that's where in in symbolically they changed their name in China from Xpeng Motors to Xpeng company. And I think being able to execute on those things over the next 18-24 months is going to be very important for Xpeng to prove to the market that they're more technology company than EV company. But you know, for Li Auto who is grounded in EREVs, does this mean that the China market is moving away from EREVs because their strength that's what their strength is.

[00:03:01]They're moving into BEVs, but it it it kind of creates some challenges for them.

[00:03:06]>> Yeah, sure. Now obviously Tesla be breathing a sigh of relief in the European market this week with some better numbers. So obviously they're seeing a turnaround from that market share which they lost in 2025.

[00:03:18]They are hoping to roll out the FSD in that part of the world as well. What did you make of those numbers because no doubt they still face some pretty tough competition from those Chinese automakers particularly BYD in that continent.

[00:03:32]>> I'm looking at this as pointing to the Iran war and I think that's going to lift all boats. I think it means that the Chinese automakers are going to get a more serious look from the Europeans and the Southeast Asia's come later in 2026 as long as the Iran war is on. So, the the the move in the higher price oil and and and diesel fuel is going to help Tesla in 2026.

[00:04:02]>> And a really important question, too. If you had $650,000, would you buy a Luce?

[00:04:10]>> So, um I I I I I I actually don't mind it. It is very very far from traditional Ferrari, but um you know, I think what's important to note is that the the people that are most critical of it aren't its demo. I think what they're looking for is to detract more tech millionaires and also the Chinese because uh you know, Ferrari's sales are less than 10% in China. So, that's a huge growth opportunity and I think that this is really really pointing towards trying to attract those Chinese consumers and the tech buyers.

[00:04:47]>> Yeah. I mean, it's kind of like what?

[00:04:49]The Chanel bag of cars because I mean, that's really where those luxury brands rely on the Chinese consumer as well. I don't know, it looks nice. Uh but so does the Xiaomi SU7. I've always been a really big fan of that one as well. So, uh let's see. But uh yeah, it copped a lot of flak this week, uh didn't it?

[00:05:07]>> 650 is a 650 is a high high price point.

[00:05:12]So, um >> A- a- and that makes I guess Tesla comparatively cheap even though I mean, it itself is seen as seen as a premium brand.

[00:05:22]>> Yeah, you know, um I I I don't think they Ferrari was thinking they were going to get this much uh slack uh for it, but I I applaud them for for really really going for it. Now, was it was it a was it a bridge too far? We'll see it in the long uh in the next uh several months.

[00:05:42]>> I just want to know if it still makes that iconic Ferrari sound, you know, when you turn on that engine, that because EVs are so quiet.

[00:05:49]>> there's an [laughter] app you can download and create all kinds of sounds for you.

[00:05:53]>> Exactly. To always appreciate it. Have a wonderful weekend. To Lee there, managing director of Sino Auto Insights.

[00:05:59]Let's try Tesla now with Tom White who's back in the house, host of Fast Market.

[00:06:03]Tom, hope you had a nice break there.

[00:06:05]Just walk us through an example trade for Tesla.

[00:06:08]>> Yeah, if you take a look at earlier this month, it seemed like the stock topped out around 453, maybe looking for a double top if it does get up to those levels, but you can create option strategies. It's still a high-priced stock, right? $430.

[00:06:22]So, create an option strategies to create maybe a directional bias while using probabilities as a guide and maybe some of those technicals also. So, I looked at a strategy that if you think that Tesla's going to basically consolidate, maybe go lower, maybe even go higher, but stay below a specific strike, maybe around that 450 level, which might be that double top level. This strategy takes advantage of it. Looked at a neutral to bearish short call vertical.

[00:06:51]Well, we're not to the June 18th monthly options. They expire in 20 days, so nearly 3 weeks to expiration on this position. Selling the 450 strike call and then against it because we want to stay risk defined in a high-priced stock like this, buy the 470 strike call. So, a short $20 wide neutral to bullish or neutral to bearish call vertical. You're going to collect roughly about a $470 credit on this trade. That's what you can make, $470 per spread with just over $1,500 in risk. Now, you've got a lot of risk considering how much you can potentially profit on this trade, but why is that?

[00:07:27]Well, it's because you have a higher probability of success. The break even of the on this trade of 450 470 to the upside, that's about 70% probability of finishing out of the money at expiration, which is what you want and that's why you've got higher risk than your potential reward. But this is based on a technical outlook where hey, maybe the stock sputters out around 450 or so, or just goes lower, or maybe consolidates at current levels around the 430 price point. So, short-term trade taking advantage of the rally that we've seen so far this month in the shares. It's still down about 12% from those all-time highs that we saw in December, but this just takes advantage of higher probabilities of success in this trade. And that break-even point, that's about 5 and 1/2% above the current share price in Tesla. So, you do have that cushion to the upside before you start getting hurt on this type of position.

[00:08:23]>> All right. Tesla shares down 2 and 1/2% right now, down 4% as well year-to-date.

[00:08:27]Tom, really appreciate the example trade. Thanks for walking us through that this morning.