Why Are Chinese EV Stocks NIO, LI, XPEV Up Today?

  • Bank of America analyst Ming Hsun Lee forecasts a February recovery in Chinese automotive demand.
  • Falling prices of lithium will benefit electric vehicle (EV) gross margins as well.
  • NIO, LI and XPEV are all in the green today as a result.
Chinese EV stocks - Why Are Chinese EV Stocks NIO, LI, XPEV Up Today?

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Nio (NYSE:NIO), XPeng (NYSE:XPEV), and Li Auto (NASDAQ:LI), three of China’s main electric vehicle (EV) companies, all opened in the green following reports of a possible uptick in automotive demand for the month of February. During January, the Chinese Association of Automobile Manufacturers reported total auto sales fell by 35% year-over-year (YOY) to 1.65 million units. The decline appeared to be caused by the Lunar New Year holiday and higher demand during December due to the expiration of purchase subsidies.

However, Bank of America analyst Ming Hsun Lee believes the month of February could show a recovery. Lee explained, “We expect auto sales to gradually recover from February, driven by demand recovery on China reopening and local government stimulus policy to support auto sales.”

Why Are Chinese EV Stocks NIO, LI, XPEV Up Today?

During January, XPeng delivered 5,218 vehicles, the lowest among the trio. Nio delivered 8,506 vehicles, while Li Auto led the way with 15,141 vehicles, up 23.4% YOY. Meanwhile, both XPeng and Li Auto have announced exciting vehicle updates.

Li Auto launched the Li L7 family SUV on Feb. 8. For testing range, China utilizes the China light-duty vehicle test cycle (CLTC), which is estimated to be 35% higher than the Environmental Protection Agency (EPA) test. The Li L7 carries a CLTC range of 1,315 kilometers. When converted to an EPA basis, the range clocks in at about 530 miles. Furthermore, the L7 will come in three trims with prices between 319,800 RMB and 379,800 RMB. A renminbi (RMB) is equivalent to about 15 U.S. cents.

Along with its January numbers, XPeng announced it would soon unveil the new version of the P7 smart sedan. Earlier this month, the P7 and G9 were made available for order in Denmark, Norway, the Netherlands and Sweden and were displayed at the eCar Expo 2023 in Stockholm, Sweden.

Another positive catalyst for Chinese EV stocks is the falling price of lithium, which is a major component used in the process of creating a battery. Per ton prices for the metal have fallen to 472,500 RMB compared to 548,000 RMB last November. These lower prices should help benefit gross margins for all three EV companies.

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. 

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2023/02/why-are-chinese-ev-stocks-nio-li-xpev-up-today-2/.

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