Shares of US-listed Chinese EV company Nio (NYSE:NIO) have recovered nearly 65% from their recent lows of around $13 per share in early May, and are currently trading at around $21. While Nio’s stock has been weighed down by a slowdown in delivery growth during the first few months of the year due to the Covid-19-related shutdowns in China, and also due to concerns about the delisting of Chinese stocks from US exchanges, several factors have helped Nio lately. First, production and delivery to Chinese electric vehicle operators rebounded strongly in June, as the government eased restrictions related to Covid-19. In fact, Nio delivered a record 12,961 vehicles for the month, up 85% from May and nearly 60% down from last year, although deliveries were lower than rivals Xpeng and Li Auto, which delivered around 15,295. and 13,024 vehicles, respectively.
Things could be looking for Nio to move forward. While there are concerns about a global economic slowdown, amid rising inflation and rising interest rates, demand is unlikely to be an issue for electric vehicle operators, in our view. Electric vehicle sales in China rose 130% to 546,000 units in June, accounting for nearly 30% of total vehicle sales. The China Passenger Car Association also raised its forecast for new energy vehicle sales for 2022 to 5.5 million, up from a previous forecast of 4.8 million. Production could rise, with signs of a semiconductor shortage emerging, due to slowing global growth and slowing demand from the technology sector. This should help Nio, considering that high-end luxury SUVs have a very high semiconductor content. On top of that, Nio also has new models in the pipeline, including the new ES7 SUV, which starts at around $78,000, and updated versions of the ES8, ES6, and EC6 vehicles slated to launch in August. The Chinese government’s support for the electric car industry is also likely to continue, given reports that it is considering extending tax credits for electric vehicles in the country.
Check out our analysis at Nio and Xpeng & Li Auto: How do Chinese EV stocks compare? For more details on how Nio stocks stack up against its peers Xpeng and Li Auto.
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