China EV stocks Li Auto, Nio and XPeng continue to rally despite more signs the Chinese economy is struggling. LI stock popped Wednesday. NIO stock and XPEV stock have seized key levels.
New, Cheaper Electric Vehicles
The Chinese startups have rallied amid signs of recovering EV sales. They are pushing out new or totally overhauled models, often at lower prices.
Li Auto said Wednesday that it expects to outsell German luxury brands in 2024, according to local reports. It cited new models like the L7 SUV, which helped to lift May sales. Li's first all-electric model is also due later this year.
XPeng reported strong presales of its new G6 SUV Monday. Various reports suggest Nio is seeing strong preorders for its new ES6 SUV. On Wednesday, Nio's taking the new ES6 to Europe, where it will be marketed as the EL6.
China Downturn
China's EV makers have lowered prices as consumption slows. Signs of a downshift in the post-pandemic recovery continue to gather.
China's central bank cut its short-term rates on Tuesday. Bloomberg reported that Barclays expects more monetary easing into next year, with several cuts to interest rates and the reserve requirement ratio.
There are hopes that China will adopt new economic stimulus to boost growth. Authorities have already signaled they'll extend an EV purchase tax exemption beyond 2023, at least up to a certain price level.
Year to date, Hong Kong's Hang Seng Index is down about 4%. The Shanghai Composite is up about 4%. In contrast, Japan's Nikkei is soaring.
LI Stock, China EV Stocks
U.S.-listed shares of Li Auto jumped 7.3% to 33.80 on the stock market today, well above the 50-day moving average. LI stock hit its highest level since early August 2022.
Nio stock climbed 1.8% to 9.05 Wednesday. XPEV stock advanced 5% to 10.81.
Both Nio and XPeng shares hold double-digit gains for the week, pushing them above their 10-week moving averages. Both are coming off a plunge in the past year. They suffered from weak sales, but that could change as new, cheaper models roll out.
Nio Enters Price War
On Monday, Nio joined the EV price war in China — after insisting it would not do so.
The EV startup said it will lower prices on all its models, including the new ES6, by RMB 30,000 ($4,200). It will also end free battery swapping services.
EV giant Tesla led the China price war. Its Chinese archrival BYD reported record sales in May, rebounding from a sluggish start to the year after responding with tit-for-tat price cuts.
Tesla shares eased 0.7% to 256.79 Wednesday. TSLA stock snapped a record 13-day win streak. It's not far from a 52-week high.
BYD stock added 0.9% to 33.35, hitting a nine-month high intraday. BYD stock is extended from a 31.07 cup-with-handle buy point but in range of a 32.77 alternate entry.
