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

Source: shutterstock.com/Larich

What a day it has been for Chinese electric vehicle (EV) stocks.

Shares of Nio (NYSE:NIO), Li Auto (NASDAQ:LI) and XPeng (NYSE:XPEV) are all up between 4% and 6% today, following strong deliveries numbers. Specifically, Li Auto provided record monthly sales of 34,134 vehicles in July while Nio delivered 20,462 cars and XPeng saw a surge of 28% in vehicle deliveries to 11,008 units.

One of the world’s largest EV makers, BYD (OTCMKTS:BYDDY) delivered an incredible 262,161 vehicles in July as well, registering a 3.6% month-over-month increase. This number absolutely shattered U.S giant Tesla (NASDAQ:TSLA), which sold only 64,285 China-made EVs in July. That’s a 31% month-over-month decline for the largest American EV maker.

Interestingly, BYD and Tesla were up approximately 1% and 2% this afternoon, as the rising tide of Chinese demand appears to be lifting all boats. Now, investors must ask the question: Which company will capture the most market share in China — the world’s largest EV market — moving forward?

Chinese EV Stocks Surge on Positive Deliveries Data

It has been a rough couple of years for investors in many Chinese stocks, to be sure. The Chinese tech sector took a beating following a hard-line regulatory assault on anticompetitive and predatory practices in these sectors. Additionally, China’s response to the pandemic — which included massive lockdowns and the shuttering of one of the world’s largest producer economies — hit most sectors very hard. Chinese EV stocks have been among the hardest-hit.

These results are important, because so many investors were banking on weak results as the Chinese economy slowly reopens. That said, it’s clear that demand remains strong in China when it comes to EVs.

Interestingly, Chinese consumers appear to be choosing China-made EVs over American options as well, with Tesla’s previous price cuts spurring a flurry of such activity in the sector. Thus, it’s unclear whether Chinese consumers will gravitate toward Tesla or other non-Chinese brands over homegrown brands moving forward. The jury’s still out on this front.

In any case, today is a good day to be an EV investor. These are all stocks I think investors should have on watch moving forward.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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