US President Joe Biden announced recently the quadrupling of customs duties on Chinese electric cars to 100%, which China slammed as politicising an economic issue and a breach of World Trade Organisation rules. This act is to protect and stimulate US clean energy industries and supply chains. Also, this move seems to counter a flood of Chinese goods, as Beijing turns to exports to compensate for weak internal demand. Let's look into the movement of Chinese EV companies.
NIO
Nio officially launched the Onvo sub-brand on May 15 and began pre-sales of the new brand's first model, the L60, for RMB 219,900 including the battery. Additionally, it is reported that China FAW will join the Nio-led battery swap alliance, becoming the seventh automaker to do so.
Nio daily chart
Oh no, bad looking chart for Nio! The share price seems to be unable to hold at its support at around 5 USD. Towards the end of last week, Nio broke below 5 dollars due to the bearish sentiment in Chinese EV market. The sell down on Thursday was accompanied by a big volume, which I believe that this will continue to cause selling pressure to the share price. Therefore, clearly a bearish vote for $NIO Inc.(NIO)$
XPENG
Xpeng said losses narrowed last quarter on higher sales while margins improved, delivering a better report card than predicted by stock analysts. It also received higher fees from licensing technologies to German carmaker Volkswagen.
Xpeng daily chart
Xpeng has a much stronger chart than Nio, mainly due to its great earnings result recently. However, earlier last week after the company released its earnings, Xpeng rallied but then erased all its gain towards the end of the day, leaving a shooting star bearish pattern. Since then, the share price continued to drop and eventually dropped below the recent uptrend line (in Orange). For such, I am bearish for $XPeng Inc.(XPEV)$
Li Auto
Li stock was down about double digit% last week, mainly due to recent weaker-than-expected earnings and guidance announcement, as well as a delay in the release of more BEV models. The less expected performance of the new model Li Mega is pressuring the company share price. Li Auto's order expectations for the model within the first 24 hours of its launch were around 3,000 units, but it ended up achieving only half of its goal. Moreover, the cumulative orders for the model within half a month of its launch stood at nearly 4,000 units.
LI daily chart
Li used to be the strongest among the Chinese EV trio but this year, it has the worst chart. As we can observe from it's technical chart shared above, it is very obvious that we can conclude that Li share price is extremely bearish and being traded under a parallel downtrend channel since early March. As long as the share price doesn't break out from this downwards channel, I will be bearish for $Li Auto(LI)$
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Comments
The movement of Chinese EV companies has been impacted by recent developments in the US-China trade relationship. The announcement by US President Joe Biden to quadruple customs duties on Chinese electric cars to 100% has raised concerns and led to a bearish sentiment in the Chinese EV market. Let's analyze the situation for two prominent Chinese EV companies, NIO and Li Auto.
NIO:
NIO recently launched its Onvo sub-brand and began pre-sales of the L60 model. This indicates the company's efforts to expand its product lineup and cater to different market segments.
China FAW, a major automaker, has joined the NIO-led battery swap alliance, which is a positive development for NIO's battery swap technology.
However, NIO's daily chart shows a bearish trend. The share price has broken below the support level of around $5 and has faced selling pressure. The high volume during the sell-off suggests continued bearish sentiment.
Li Auto:
Li Auto faced challenges last week, with its stock declining by double digits. This was primarily due to weaker-than-expected earnings and guidance, as well as a delay in the release of more BEV models.
The performance of Li Auto's new model, Li Mega, fell short of expectations, leading to pressure on the company's share price.
Li Auto's daily chart indicates a bearish trend, with the share price trading under a parallel downtrend channel since early March. Unless there is a breakout from this channel, the short-term outlook for Li Auto remains bearish.
Investing in US or China EV stocks depends on various factors and individual preferences. Here are some considerations for each market:
Investing in US EV Stocks:
The US EV market is highly competitive, with established players like Tesla and new entrants like Rivian and Lucid Motors.
The US government has been supportive of the EV industry, providing incentives and promoting clean energy initiatives.
The US market offers a larger customer base and a more mature EV infrastructure.
Investing in Chinese EV Stocks:
China is the world's largest EV market, with a growing demand for electric vehicles.
Chinese EV companies have been at the forefront of technological advancements and innovation in the industry.
The Chinese government has implemented policies to support the development and adoption of EVs, including subsidies and infrastructure investments.
It is important to note that investing in stocks involves risks, and it is advisable to conduct thorough research and analysis before making any investment decisions. Additionally, the recent trade tensions between the US and China can impact the performance of EV stocks from both countries.
Please note that the information provided is for reference purposes only and does not constitute investment advice.