Chinese EV stocks are all the rage today as companies like Nio (NYSE:NIO), Li Auto (NASDAQ:LI), and Xpeng (NYSE:XPEV) continue to ride the good vibes from China’s government earlier this week.
What’s behind today’s jump?
Well, it appears Chinese EV makers are still on cloud 9 following optimistic commentary from China’s Politburo, the country’s highest-ranking decision-making body. Indeed, at a conference, Monday headed by Chairman Xi Jinping, China’s top brass shared some kind words regarding the recovery of the country’s economy.
They agreed the country’s economy performed notably well in the first six months of the year, according to Chinese state news. Officials even pointed to the resilience and potential the Chinese economy possesses,
It wasn’t all peaches and cream — officials acknowledged China’s economy has some weak spots in the form of weak domestic demand, economic risks, and a growingly convoluted macroeconomic environment. They also pointed out the relatively stagnant economic growth from Q2 to Q1 this year in the world’s second-largest economy.
However, the general tone of the meeting was undoubtedly optimistic. Chinese officials even vowed to pursue a more proactive economic policy and assist the country’s capital market, a big win for investor sentiment. Beijing even specifically pointed to high-growth electronics and vehicle industries as areas of intended development in the country.
Chinese EV Sticks Surge on Xpeng-Volkswagen Deal
Chinese EV stocks have boomed following the conference, with some companies recording staggering gains in stock price. Indeed, NIO and Xpeng are the biggest EV winners this week, up 24% and 34%, respectively, since market close last Friday. At the time of writing, NIO and XPEV are up 10.9% and 27%, respectively, heading to the bell.
Not alone, Li Auto is also enjoying some strong gains of late. LI stock is up 5% in the past five days, including a tidy 3.8% boost today.
Xpeng is also enjoying the benefits of a surprise investment from the likes of German auto giant Volkswagen (OTCMKTS:VWAGY). According to Xpeng Chief Executive Xianpen He, Volkswagen is investing $700 million in the EV start-up.
“The Volkswagen Group and XPeng each brings in highly complementary strengths into this long-term strategic partnership… Since the founding of XPeng, we have been developing full-stack technologies from EV platform to connectivity and [self-driving] software in house. We are excited about the opportunity to contribute our expertise to the strategic partnership and create value for XPeng and our shareholders.”
By and by, Chinese EV makers have had strong years so far in 2023. LI and XPEV are close to doubling their respective share prices year-to-date, while NIO is trending up around 37% since January.
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.
