For the automotive sector, much of the recent news hasn’t been good. Multiple analysts are calling for slower growth for vehicle manufacturers, suggesting 2022 will be tough. However, one company is trying to buck that trend today. Kaixin Auto (NASDAQ:KXIN) announced a strategic partnership that includes a large EV truck order. As a result, KXIN stock is enjoying a solid trading day so far.
What’s Happening With KXIN Stock
Today’s news has sent this little-known company on a wild ride. Within the first hour of trading, KXIN stock is up nearly 40% and it shows no signs of slowing down. This comes on the heels of a week that saw the stock fall by as much as 20%.
While KXIN is enjoying a morning of growth, many of its peers haven’t been so lucky. The bigger names that typically dominate coverage of China’s vehicle sector are all falling this morning. Both Nio (NYSE:NIO) and Xpeng (NYSE:XPEV) have been declining in recent days.
Why It Matters
The last time Kaixin saw any type of significant growth, it was also driven by EV news. In August 2021, the company began a pivot from its previous focus on selling used vehicles to producing electric ones and as a result, KXIN stock skyrocketed. Today’s news takes this a few steps further. According to the company’s announcement, logistics conglomerate Beijing Bujia International Logistics has agreed to purchase 10,000 new energy trucks from Kaixin. This order is worth roughly $500 million.
For a company like Kaixin, this type of strategic partnership could be exactly what it needs to establish itself as a key player in China’s fast-booming EV sector. Bujia bills itself as the country’s “leading automotive new retail logistics and service terminals platform.” If it is happy with the first EV purchase from Kaixin, it stands to reason that it will order more. For logistics company, a transition to electric fleets will be of great importance in the years to come.
It’s especially worth noting that Beijing Bujia has big plans for the future of China’s logistics, which include building 300 automotive logistics transfer warehouses and 1,000 automotive terminal delivery centers. According to the statement issued by Kaixin, this will include 60,000 delivery trucks. As of now, the company has specified that at least 30% of that fleet will be new energy trucks. That number could grow even further as the company scales operations.
What It Means for Kaixin Auto
The way it looks from here, KXIN Stock may not be trading at the penny level much longer. The company has proven that it wants to adapt and meet the rising tide created by the EV boom. This new partnership is the perfect way for it to do exactly that.
The world may still be grappling with the current supply chain crisis, but the need for innovations in the sector has never been more clear, as has the need for shipping companies to find more energy efficient ways of moving their products. The auto sector may be facing a questionable future but KXIN stock is absolutely worth watching as we move forward to 2022.
On the date of publication, Samuel O’Brient did not have (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.