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NIO, LI, XPEV: Chinese EV Stocks Fall Sharply on Rising Geopolitical Tensions

Story Highlights

Chinese electric vehicle stocks declined amid a broader market sell-off yesterday. Rising tensions from the ongoing Russia-Ukraine war, China-Taiwan issues, and an increasing interest rate backdrop all added to the decline in stocks.

The stocks of Chinese electric vehicle (EV) makers Nio (NYSE:NIO), Li Auto (NASDAQ:LI), and XPeng (NYSE:XPEV) fell yesterday as a result of a string of unfavorable geopolitical news.

The ADR of Nio slid 10.3% to $18.30, while LI stock declined 8.8% to $23.10. Meanwhile, the ADR of XPeng fell the most, by 11.6%, to $14.09. The sharp decline in XPEV was also partly because of the unexpectedly high pricing of its new G9 SUV model, ranging between 309,900-469,900 RMB ($44,000 to $67,000).

Reasons for the Fall in Chinese Stocks

Most importantly, China’s ally Russia called for “partial mobilization” of its military reserves yesterday. The unending Russia-Ukraine war has taken an ugly turn as Russia moves to seize a more significant part of Eastern Ukraine. China has been feeling the heat due to its strong bond with the invading nation.

Furthermore, rising tensions between Taiwan and China may have added to the pressure on stocks. On Monday, U.S. Air Force Secretary, Frank Kendall stated that invading Taiwan would be a huge mistake for any aggressor nation. “I believe that the Taiwanese people would fight, and I believe that we would assist them in some form,” Kendall added. As a result, the mainland is indirectly threatened with any intent to attack Taiwan. 

And finally, the Federal Reserve’s increase of 75 basis points in the interest rate and the expectation of further rate hikes sent the markets into a downward spiral.

Furthermore, China’s stringent monetary policy and the impact of lockdowns in certain parts of the continent have continued their influence on the performance of Chinese stocks.

What is NIO Price Target?

On TipRanks, the average Nio price target is $30.51, which implies an impressive 66.7% upside potential to current levels. Nio stock commands a Strong Buy consensus rating based on nine Buys. The stock has lost 45.3% so far this year.

Is LI Stock a Buy Now?

With nine unanimous Buys, LI stock has a Strong Buy consensus rating on TipRanks. The average Li Auto stock prediction of $68.89 implies a massive 198.2% upside potential to current levels. Meanwhile, the stock is down 28.6% so far this year.

Is XPEV a Buy or Sell?

XPEV stock has a Strong Buy consensus rating on TipRanks. This is based on nine Buys and three Holds. The average XPeng price forecast of $44.02 implies a humongous 212.4% upside potential to current levels. Meanwhile, XPEV stock has lost a whopping 72% so far this year.

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