Today, investors in Chinese electric vehicle (EV) stocks are seeing impressive gains. This rally has come amid a longer-term decline for Chinese electric vehicle manufacturers. Indeed, investors have been looking to de-risk their portfolios and increasingly looked away from China for growth.
Investors in Chinese EV stocks Nio (NYSE:NIO), Li Auto (NASDAQ:LI) and Xpeng (NYSE:XPEV) have largely lamented slowing growth in China and an assortment of regulatory headwinds that are not favorable to investors. Despite high growth rates and a bullish longer-term outlook for EV growth in China, investors have instead focused on chip shortages and other near-term headwinds as valuations across this sector have dipped materially from last year’s peak.
That said, shares of these three top Chinese EV stocks appreciated 16.8%, 8.1% and 8.2%, respectively, today. The Chinese EV trade appears to be back on, and investors are piling in.
Let’s dive into what’s driving this bullish sentiment shift today.
Chinese EV Stocks Surge on Incredible Delivery Numbers
Today, investors in Chinese EV stocks are focused on recently reported sales data for November and December. The last two months of 2021 saw Chinese EV sales skyrocket 169% to nearly 3 million vehicles. Additionally, reports suggest that EV sales comprised almost 15% of all new vehicles sales for these months.
These numbers are extremely bullish, and heads and shoulders above the EV sales data coming out of the U.S. Accordingly, investors looking for growth in the EV sector appear to be pivoting today to higher-growth Chinese counterparts.
January’s sales data could come in better than expected following these numbers. Previously, investors had factored in the potential for a steep decline in demand, following a 30% reduction in Chinese EV subsidies at the beginning of this year. However, recent strong demand suggests these EV stocks could have more room to run. An earlier Chinese New Year also could bode well, should consumers continue to double down on their EV purchases.
Other news boosting NIO today was the announcement that the company offered to repurchase senior convertible notes due in 2024. Investors are taking this as a bullish sign by the market today as they consider whether Nio believes its share price is undervalued.
On the date of publication, Chris MacDonald 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.
