Markets look set to end the week on a good note with both the S&P500 And Dow Jones Industrial Average up after a turbulent trading session yesterday.
But several electric vehicle (EV) Shares are significantly higher today as investors believe Chinese electric vehicle makers may be ready to expand further into the market with more affordable models.
investors step on the gas pedal on shares of Nio (NYSE:NIO), Li Auto (NASDAQ:LI)And XPeng (NYSE: XPEV). As of 12:22 p.m. ET on Friday, shares of Nio were up 8.8%, while shares of Li Auto and XPeng were up 6.6% and 10.5%, respectively.
Lead in a new direction
Speaking to CNBC yesterday, Nio and XPeng executives both said they are committed to providing more moderately priced vehicles in 2024. Specifically, Nio CEO William Li told the cable network that the company would offer a cheaper SUV than You’re hereThe Y model.
XPeng plans to launch its more economical Mona in the coming months, according to co-president Brian Gu.
Nio’s comments won’t come as a surprise to those who follow the company closely. On the recent Fourth Quarter 2023 Conference Call, Li referred to the more family-oriented model expected to launch in the second half of the year. Becoming optimistic, Li said:
“[The new model] is aimed at the mass market as well as family users where competition is also more intense. But fortunately, it can take advantage of existing electrification and smart technologies and infrastructure already developed by Nio. So this has some advantages over building a whole new brand from scratch. For this second brand, we will focus more on volume.”
Likewise, XPeng also sees the launch of the Mona as an auspicious opportunity. During Xpeng’s Q4 2023 conference call, James Wu, vice president of finance and accounting, expressed the belief that XPeng’s partnership with transportation company DiDi would be beneficial.
It appears investors are bidding higher on Li Auto in sympathy with Nio and Peng, whose apparent recognition of the more moderately priced vehicle market is likely making investors optimistic that Li Auto will also benefit from growing demand for its flagship family SUV.
Is now the time to add these EV stocks to your portfolio?
While many investors are interpreting the news from Nio and XPeng as a green light to buy the stocks, both companies’ new approaches should be taken with a few grains of salt. The two companies both managed to increase their turnover, but also recorded increasingly large net losses.
Unless investors are comfortable with a certain level of risk, now is not the best time to click the buy buttons on Nio and XPeng. Li Auto, however, has generated positive net profit over the past four quarters, suggesting it may be better suited to electric vehicle investors looking to reduce risk.
