This morning, shares of Chinese EV stocks Nio (NYSE:NIO), XPeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) are all in the red, due in part to accelerating Covid-19 cases. Currently, the city of Shanghai and its 25 million residents are in lockdown; yesterday, Shanghai reported 26,087 new cases. The city of Guangzhou has also started to initiate Covid-19 restrictions after 20 cases were reported last week. As a major trading hub, a lockdown of Guangzhou could further aggravate supply-chain issues.
That said, the lockdown news isn’t the only factor sending shares of Chinese electric vehicle (EV) stocks down today. Here’s what investors should know.
Why Are Chinese EV Stocks NIO, LI and XPEV Down Today?
Over the weekend, Nio announced that it was suspending EV production due to new Covid-19 restrictions. The company explained the following:
“Since March, due to reasons to do with the epidemic, the company’s supplier partners in several places including Jilin, Shanghai and Jiangsu suspended production one after the other and have yet to recover.”
Nio isn’t alone, though. In late March, Tesla (NASDAQ:TSLA) also closed down its Shanghai production facility due to mounting cases. Meanwhile, XPeng and Li Auto have yet to announce any EV production suspensions.
According to Barron’s, Nio manufactures its vehicles in Xinqiao, Hefei, which is a roughly 300-mile drive from Shanghai. Nio has also stated that deliveries for customers may be delayed “in the near future.”
Nio, Li Auto and XPeng Announce Price Hikes
On top of the recent production suspension, Nio also recently announced that it will be raising prices for three of its models due to rising raw material costs. Specifically, the ES8, ES6 and EC6 will each increase by about $1,570 each. This price change will be effective May 10. However, prices for its ET5 and ET7 models will stay the same. Nio CEO William Li had the following to say:
“Originally [we] thought we could bear it, but now with this pandemic it’s even harder to bear […] We have no alternative but to raise prices. Please be understanding.”
Beforehand, Nio had stated that it had no plans to raise prices “in the near term” during late March. However, surging Covid-19 cases and continued supply-chain challenges seem to have caused the company to backtrack on its statement.
NIO is not the only pick of the Chinese EV stocks that has had to hike prices, however. Both XPeng and Li Auto raised their own EV prices back in March. XPeng reported raising prices between $1,580 and $3,150. Meanwhile, Li Auto has hiked prices by roughly $1,850.
On the date of publication, Eddie Pan 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.
