Nio (NYSE:NIO) stock was boosted by news China’s government will extend tax exemptions on electric vehicles.
The news came just a day after disappointing May deliveries sent the stock down. Nio sold less than half as many vehicles in May as it did in December.
Nio opened this morning at about $7.88 per share, still down 22% on the year but up 4.6% over the last month. The market capitalization is about $13.2 billion on fiscal 2022 sales of about $7 billion.
New Energy Boost
China’s government is acting to boost demand as fears grow that its post-Covid economic recovery is slowing. In a meeting, the country’s cabinet said that “economic recovery is not yet solid.”
Other Chinese EV stocks were up on the news. XPeng (NASDAQ:XPEV) rose 7%, Li Auto (NASDAQ:LI) was up 5%, and Polestar Automotive (NASDAQ:PSNY), owned by China’s Geely (OTCMKTS:GELYF), rose 2.5%.
Shares in China’s EV makers have been suffering from a price war started by Tesla (NASDAQ:TSLA), but there have been winners. BYD (OTCMKTS:BYDDF), which focuses on mid-market cars costing $25,000, set a delivery record in May.
Li also set a new sales record in May, selling 28,277 vehicles in China. Li has emerged as China’s leading luxury EV maker in recent months. But it is focused solely on the domestic market. Nio, by contrast, is increasing exports to Europe.
Tesla delivered 75,842 vehicles from its Shanghai factory in May. Tesla stock was up 1.55% overnight, opening at about $211 per share, a market cap of over $665 billion. The gain brought CEO Elon Musk’s personal fortune back over $200 billion. Musk got a warm welcome to Shanghai this week, where he discouraged the ongoing decoupling of China from Western markets.
NIO Stock: What Happens Next?
China’s government seems determined to keep multiple EV companies strong and encourage exports. But the market’s winners, except for Tesla, aren’t those who are doing the exporting.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
