Chinese electric vehicle (EV) companies are in view today as a number of major car makers trend down. Chinese EV stocks NIO (NYSE:NIO), Li Auto (NASDAQ:LI) and XPeng (NYSE:XPEV) are well in the red today following yesterday’s bullish wave.
So, what’s going on with Chinese EV companies lately?
Well, today Nio offered investors an update of its status pertaining to the Holding Foreign Companies Accountable Act (HFCAA). If you recall, a number of tech-forward Chinese companies have been under regulatory duress lately. Indeed, several Chinese companies, including Nio and XPeng, have been the subject of delisting fears after failing to comply with U.S. auditing laws.
However, Nio provided investors insight into its current phase in its regulatory snafu. As per the press release, the company is currently in violation of an HFCAA rule by using an auditor “whose working paper cannot be inspected or investigated completely by the Public Company Accounting Oversight Board (PCAOB).”
Nio attempted to reassure investors that it is exploring potential solutions, highlighting its recent March secondary listing on the Hong Kong Stock Exchange.
Unfortunately, the company may have failed to persuade investors as NIO stock eyes a nearly 10% drop this morning. It’s not alone, however. Chinese EV competitors Li Auto and XPeng are also down today, about 5% and 8%, respectively.
What else do you need to know about Chinese EV makers today?
Chinese EV Stocks Slump Following Mid-Week Market Boom
Chinese EV companies may also be seeing reversals from yesterday’s interest-rate-induced boom. Yesterday, Federal Reserve Chairman Jerome Powell reassured investors that the Fed is not considering a 75-basis-point hike. The markets responded with outstanding optimism. The S&P 500 and Nasdaq Composite each rose about 3%, marking their best single day since 2020.
Unfortunately, investors quickly regained their bearish outlook. A number of companies are currently backtracking from yesterday’s gains as the S&P treads down nearly 2%. This is likely part of the story behind the Chinese EV slump today.
On the date of publication, Shrey Dua 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.