Investors are watching Nio (NYSE:NIO) as the trading week opens on Monday after the Chinese electric vehicle maker’s stock was revealed to have seen the greatest increase in short interest. NIO stock lost 5% last week.
Morgan Stanley analysts listed NIO shares among the top Chinese stocks listed in Hong Kong and the United States that have seen the biggest jump in short interest in March.
And, if that wasn’t enough to grab investors’ attention, Deutsche Bank analyst Edison Yu raised concerns that weakness in Nio, XPeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) “has been driven by worries about competition,” Barron’s reported. The publication warned in December that new competition was a problem for Chinese electric vehicle makers and advised investors to be cautious.
InvestorPlace contributor David Moadel raised similar concerns earlier this year, writing that “NIO stock is finally showing signs of life, but other automakers won’t easily relinquish their market share.”
NIO Stock Aided by Beijing Climate Goals
The real wild card in the EV equation is China. With 1.3 million electric vehicles sold in China last year, the world’s second-biggest economy is the frontier of EVs and the largest market for them. And it’s getting help from Beijing’s work on implementing the Paris Climate accord.
Bloomberg on Monday reported that meetings held last week by senior envoys from the U.S. and China resulted in a joint statement committing to cooperating to tackle climate change.
That move, ahead of the next global climate meeting in Glasgow later this year, comes as governments around the world are enforcing tighter regulations to help EV sales increase. Technological advances and a change in consumer preferences also serve as important tailwinds for the industry.
So far this year, NIO stock is down 32.5%, after gaining a stellar 1,210% in 2020. In case you were wondering, Tesla (NASDAQ:TSLA) shares “only” increased 720% last year.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News, McKinsey & Co. and McDonald & Company Investments.