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Why Chinese EV Stocks NIO, LI and XPEV Are Driving Higher Today

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Chinese EV Stocks - Why Chinese EV Stocks NIO, LI and XPEV Are Driving Higher Today

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Nio (NYSE:NIO), Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) are all driving higher on Wednesday. That’s as Chinese electric vehicle (EV) stocks all seem to have found a burst of bullish momentum. Li Auto is up more than 9% on the day, while Nio is higher by 10%. Xpeng leads the trio with a 15% gain, despite some intraday volatility due to Federal Reserve meeting minutes.

For the week, XPEV stock is up more than 21%, while all three Chinese EV stocks are notably higher so far. That’s outpacing the broader market returns in the S&P 500 and Nasdaq Composite, which are up 0.3% and down 0.2%, respectively.

Even more impressively, it’s bucking the horrendous trend we’ve seen in U.S. EV stocks like Rivian (NASDAQ:RIVN), Lucid Motors (NASDAQ:LCID) and Tesla (NASDAQ:TSLA). These stocks have all performed terribly, with Lucid and Tesla hitting new 52-week lows yesterday and Rivian hitting new lows today.

What’s Driving Chinese EV Stocks Higher Today?

Over the New Years weekend, Tesla announced record fourth-quarter deliveries. However, those deliveries fell short of analysts’ expectations. That caused the stock to plunge as investors worry about waning demand for Tesla and other EV stocks.

Another issue? A recession. Economic worries continue to create concerns about consumer-centric businesses, particularly with the automakers.

For Chinese EV stocks though, the situation is a little different. While China is fighting through a painful breakout of Covid-19, it’s also committed to reopening its economy. That has investors bullish on what that will mean for Nio, Li Auto, Xpeng and, while it doesn’t seem like it, even Tesla.

Further, Nio recently announced a monthly delivery record of 15,815 vehicles in December. That was up more than 50% year-over-year (YOY). For the quarter, Nio delivered more than 40,000 vehicles, up 60% YOY.

Li Auto also delivered a monthly record in December, with deliveries up more than 50% to 21,233 vehicles. Xpeng almost doubled its month-over-month delivery count.

The rally goes beyond Chinese EV stocks. Alibaba (NYSE:BABA) stock is higher by more than 12% and is helping to lead a broad-based rally in Chinese stocks. Remember even on days when the U.S. market is struggling, Chinese EV stocks can perform quite well when Chinese stocks are rallying. That point is clear today, with the iShares China Large-Cap ETF (NYSEARCA:FXI) up nearly 6%.

On the date of publication, Bret Kenwell did not have (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.