A future with driverless cars is quickly approaching — and it may be coming to China first. Indeed, the country has named multiple Chinese automakers on a list of firms with the clearance to “pilot vehicles with L3/L4 autonomous driving capabilities for road access.” This list includes electric vehicle (EV) producer Nio (NYSE:NIO), which has seen shares mostly trend downward for the past six months.
This potential catalyst hasn’t done much for NIO stock so far today. That said, the news could help boost shares once the company begins testing autonomous vehicles on public roads. That is, of course, if other companies don’t beat Nio to the punch. Getting to a market first is everything and several of the EV maker’s stronger peers also want to usher in a driverless future.
What’s Happening With NIO Stock?
There’s almost no doubt that the next phase of transportation will be autonomous driving. Tesla (NASDAQ:TSLA) has been hard at work on perfecting this technology, although not without significant setbacks. Now China is clearing the runway for some of its domestic automakers to start getting their autonomous vehicles on the road. According to EV, the nine companies will “conduct tests on public roads as part of China’s strategy to speed up the adoption of self-driving cars and improve the integration of intelligent connected vehicle systems with road infrastructure.”
NIO stock is currently down 1% for the day, even after spending the past week mostly rising. However, things are looking better for some of Nio’s competitors. Chinese EV leader BYD (OTCMKTS:BYDDY) is also on China’s driverless list and in the green today after reporting strong delivery growth for May 2024.
True, Nio also just reported impressive delivery numbers for May, showing sizable year-over-year (YOY) growth. But NIO stock is still down today while BYDDY stock is rising. This suggests that the company is facing some severe challenges. While Nio is working hard to regain lost ground, the market appears skeptical.
The Road Ahead
For all of the challenges it has faced over the past year, NIO stock has managed to stay in the game. Indeed, shares have mostly outperformed risky EV stocks like Mullen Automotive (NASDAQ:MULN) and Fisker (OTCMKTS:FSRN). But even as Nio has reported strong deliveries and secured an external investment for its power unit, shares have struggled to remain above the $5 mark.
Now, Nio has a chance to show investors they shouldn’t count it out. If the EV firm can demonstrate real progress in autonomous driving trials, Nio has a chance to pull ahead of competitors. But that means beating out a much larger competitor– and BYD has both the size and resources to compete with anyone. After all, the auto leader has continued to beat Tesla at its own game in China. Nio has a formidable foe, and its odds aren’t looking good.
On the date of publication, Samuel O’Brient 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.
