Markets appear poised to end the week on a positive note for both S&P 500 And Dow Jones Industrial Average it is slowly rising after a bumpy trading session yesterday.
But several electric vehicle (EV) stocks are trading sharply higher today as investors anticipate that Chinese electric vehicle makers may be poised to make greater inroads into the market with cheaper models.
Investors are stepping on the accelerator when it comes to stocks Nio (NYSE:NIO), Li car (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.
Drive in a new direction
Speaking to CNBC yesterday, Nio and XPeng executives both said they are committed to offering more moderately priced vehicles in 2024. Specifically, Nio CEO William Li told the cable channel that the company will offer an SUV that is cheaper than Teslais Model Y.
XPeng expects to launch the more fuel-efficient Mona in the coming months, according to co-president Brian Gu.
Nio’s comments will come as no surprise to those who follow the company closely. During the most recent conference call in the fourth quarter of 2023, Li pointed to the more family-focused model that will be launched in the second half of the year. Li became more and more optimistic and said:
“[The new model] is aimed at the mass market and also at family-oriented users where the competition is also more intense. But fortunately, it can leverage existing electrification and smart technologies and infrastructure that Nio has already developed. So there are certain advantages to starting a completely new brand from scratch. With this second brand, we’re going to focus more – we’re going to focus more on volume.”
Likewise, XPeng sees the introduction of the Mona as a promising opportunity. In Xpeng’s fourth quarter 2023 conference call, James Wu, vice president of finance and accounting, expressed his belief that XPeng’s partnership with transportation company DiDi will be beneficial.
It appears that investors are bidding higher for Li Auto in line with Nio and Peng, whose apparent recognition of the market for more moderately priced vehicles should make investors optimistic that Li Auto will also benefit from growing demand for its flagship family SUV will benefit.
Is now the time to bolster your portfolio with these EV stocks?
While many investors interpret the news from Nio and XPeng as a green light to buy the shares, the new approaches from both companies should be treated with caution. The two companies managed to increase their sales, but they also had to accept increasingly higher net losses.
Unless investors are comfortable with a reasonable amount of risk, now doesn’t seem like the best time to hit the buy button on Nio and XPeng. However, Li Auto has generated positive net income over the past four quarters, suggesting it may be better suited for EV investors looking to reduce risk.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio and Tesla. The Motley Fool has a disclosure policy.
“Why EV Stocks Nio, Li Auto and XPeng Are Soaring Higher Today” was originally published by The Motley Fool