Shares in Chinese electric vehicle (EV) makers Nio (NYSE:NIO), Li Auto (NASDAQ:LI) and Xpeng (NASDAQ:XPEV) rose overnight as concerns over lockdown protests eased.
NIO rose 4.5%, XPEV 5%, and LI 6.2%. The jumps in NIO and XPEV brought them back to the levels of Nov. 22. LI is back to levels of Nov. 15. All remain down substantially for the year. XPEV has lost 85% of its Jan. 1 value.
Chinese EV stocks have all fallen over the year but this fall has not been a proper reflection of their companies’ results. Production of Chinese EVs has been up overall in 2022, although all three of the luxury brands continue to lose money. The Chinese yuan is also down over 12% against the U.S. dollar this year, trading recently at 7.17.
Tough Times on Electric Avenue
All electric vehicle stocks have had a rough 2022. Tesla (NASDAQ:TSLA) is down 48%, in line with the fall of LI. Companies that make gas-powered cars are also down, but less. Toyota (NYSE:TM), for instance, is down 18.5%.
Analysts continue to hope the worst is over for the Chinese EV sector, and for China generally.
Optimism is especially high for LI stock, which will announce third-quarter results on Dec. 5. Li’s deliveries in October were 31% higher than a year ago, at over 10,000 cars.
Nio has promised to export the next generation of its cars to the U.S. and to launch its own battery production line. Batteries represent 40% of an electric car’s costs. CEO William Li says the company hopes to be profitable in 2024 and to make its own semiconductors.
XPeng is having the toughest time. Jefferies recently downgraded the stock to sell, concerned about high prices, lithium supplies, and competition with Tesla. The company’s deliveries in October fell to half those of its rivals. It recently launched a new sports utility vehicle called the G9.
Chinese EV Stocks: What Happens Now?
China’s move toward vaccination against Covid-19 rather than just locking down cities could boost the entire economy.
It’s China’s future, not just that of electric cars, that investors in these stocks are buying.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
