The Chinese government has decided to step in and aid China’s supply chain problems. It will take “drastic” measures to try and boost manufacturing output and stabilize supply chains.
Now, why are we excited about this? Because this is really good news for EV stocks in general — but especially good news for Chinese EV makers like NIO (NYSE:NIO).
China is the heart of the EV economy. Battery metals are not mined for in China, but around 60% of the world’s global EV manufacturing happens in the country. So, when China’s manufacturing goes up, China’s EV stocks go with it.
For EV makers all over the world, the problem is not with demand – there’s plenty of that. The issue lies with supply. And with China’s involvement in the battery-making process, Chinese supply chains directly affect the number of EVs companies can produce.
So, this bureaucratic intervention is an important piece of the EV puzzle. Further, the Chinese government has announced it will extend tax breaks for first-time EV buyers.
These were set to phase out by the end of 2022. But with current market conditions and manufacturing issues, they are being reinstated until at least 2023.
This is great news for EV markets all over the world. But as far as China goes, NIO stock is our favorite Chinese EV play right now.
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