Nio (NYSE:NIO)
Although China’s market for electric vehicles (EVs) faces several obstacles, shares of Nio (NYSE:NIO) increased by more than 8% early Thursday. Nio’s American depositary shares were 6.1% higher as of 12:37 p.m. Eastern Time on Wednesday, even though they had given up some of the gains they had made.
Then what?
Investors in Nio (NYSE:NIO) should express their gratitude to the Chinese government for today’s boost. While Nio and other electric vehicle manufacturers are working to recover from missed production and a drop in demand caused by zero-COVID policy lockdowns in numerous places, they continue to confront new hurdles.
Recently, a significant drought has led to a decline in the supply of hydroelectric electricity, which has resulted in authorities having to impose mandatory power cuts. However, the government has also just proposed an economic stimulus package to encourage continued growth in the economy.
What’s Next?
Nio (NYSE:NIO) increased production in June and July after having trouble obtaining parts and observing a decrease in demand throughout the spring. This was because Chinese authorities had sealed off numerous cities to stop the spread of COVID-19. However, a severe drought is impacting hydroelectric production, which has led to power cuts being enforced for enterprises in the province of Sichuan, which is home to many automotive suppliers. In southwest China, power outages have now spread to include electric vehicle charging stations.
The Chinese government revealed yesterday that it will invest over $150 billion in infrastructure projects across the country to boost its overall economic growth. Investors consider this to be very encouraging news for the revival of the electric vehicles (EVs) market. Additionally, today’s gains aren’t limited to just the stocks of manufacturing and production companies. The spending could be beneficial for the entirety of the consumer market segment.
When Nio (NYSE:NIO) reported its following quarterly results, investors were already looking forward to hearing what the company had to say about its sales in the third quarter. There is a growing expectation that the recently passed economic stimulus package would assist in making the upcoming report even more hopeful.
Featured Image: Megapixl @Freerlaw
Author Shariq Khan 
