© Reuters. People visit the booth of Chinese electric vehicle (EV) maker Li Auto during a media day for the Auto Shanghai show in Shanghai, China April 20, 2021. REUTERS/Aly Song/File Photo


(Reuters) – China’s electric vehicle start-ups reported stronger sales for May and forecast continued gains for June as supply chains and output begin to recover from the disruption of COVID-19 lockdowns in Shanghai and other cities.

Li Auto Inc reported a May sales gain of 166% from a year earlier to 11,496 vehicles on Wednesday. Xpeng (NYSE:) Inc posted a gain of 78% with 10,125 deliveries. Nio (NYSE:) Inc delivered 7,024 EVs, up 5% from a year earlier.

All three companies cautioned that output had not yet fully recovered, constrained by parts supply issues. Shanghai, a key production hub, ended its two month lockdown for most residents on Wednesday.

Industry-wide sales data for May, including for the EV leaders in China, BYD and Tesla (NASDAQ:), are expected by next week.

China has announced a range of measures to support auto sales and the sputtering economy, including a halving of the tax on purchases of small-engine cars with sticker prices of up to about $45,000. In a report issued Wednesday, Fitch said it expects sales for the world’s largest auto market will climb 3.9% this year after 3.8% growth in 2021.

But Fitch also warned of risks: “The local market faces significant challenges, ranging from a limited supply of new vehicles, elevated unemployment and weakness in the local construction and real estate sectors.”

Li Auto cautioned that shipments from suppliers around Shanghai remained disrupted. “We continue to encounter challenges due to parts supply shortages,” Li Auto President Yanan Shen said in a statement.

Xpeng said it had restarted two shifts at its plant in southern China and was working to accelerate deliveries. Nio said it expects to increase output in June after recent moves to end lockdown restrictions.

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