Why Is NIO Stock Up 3% Today?

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Nio (NYSE:NIO) stock is up 3% today on the momentum generated by some important industry news. Fellow Chinese electric vehicle (EV) producer XPeng (NYSE:XPEV) has launched its G6 Ultra Smart Coupe SUV. This highly anticipated EV didn’t have any trouble garnering interest from consumers weeks before its launch.

However, a new development has given investors even more cause for excitement. The latest edition to XPeng’s model line is priced below the Tesla (NASDAQ:TSLA) Model Y. This means that it will have an excellent chance of competing with one of the industry’s biggest names. The momentum surrounding this hot new vehicle is pushing NIO stock up as well as XPEV.

Does this mean that Tesla should be worried about the competition posed by XPeng’s newest EV? Let’s dive deeper into the details surrounding the launch and what it means for XPeng and its competitors.

What’s Happening With NIO Stock

As can be expected, XPEV is today’s leader among Chinese EV stocks. It is up 14%, and while NIO stock is only up 3%, it still outpaces Li Auto (NASDAQ:LI), which has only risen 2% as of this writing. Despite some extreme price action, NIO is still coming off an excellent month, during which it has managed to rise 30% even as investors have exited the company, including Chinese giant Tencent Holdings (OTCMKTS:TCEHY).

The successful launch of the new G6 is a likely turning point for XPeng. Yes, it will it help the smaller company secure a piece of Tesla’s market share. However, there is another key reason why investors should be excited about the new EV. It is the first vehicle produced on XPeng’s Smart Electric Platform Architecture (SEPA) 2.0 platform, which could signal a breakthrough in EV production. Deliveries to China are scheduled to begin in July 2023, and XPEV stock will likely keep rising until they do.

This doesn’t necessarily mean that NIO stock will continue to ride the momentum. It’s certainly a possibility. However, investors shouldn’t forget that XPeng is still one of Nio’s chief rivals, and it has just made a major step forward. The latter is also facing a difficult road ahead as it navigates increasing competition and experts who don’t think it can deliver on promises made by its management. While XPeng will likely continue to rise, Nio’s future looks far less certain.

On the date of publication, Samuel O’Brient 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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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