Investors love a good trend, and the electric vehicle (EV) space has done extremely well. Tesla (TSLA -3.54%) paved the way for companies to see the true potential of EVs, but that's only created a huge throng of other players looking to duplicate Tesla's success.

It's therefore not surprising that in light of good news on the electric vehicle front from NIO (NIO -8.40%) and XPeng (XPEV -7.43%), most major stock markets are moving higher. As of 11:45 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.53%) was up 131 points to 34,660. The S&P 500 (^GSPC -0.74%) contented itself with a three-point rise to 4,207, while the Nasdaq Composite (^IXIC -0.39%) gave up early gains to fall 22 points to 13,727.

Below, we'll look more closely at how NIO and XPeng are doing and what it means for longer-term investors in electric vehicle stocks.

NIO hits the gas

Shares of NIO climbed almost 8% Tuesday morning. The Chinese EV specialist released its monthly sales figures, and they continued the upward trend that investors wanted to see.

NIO vehicle inside a NIO charging garage.

Image source: NIO.

NIO delivered more than 6,700 vehicles in May, which was higher by 95% than the same month in 2020. NIO's mix of vehicle deliveries was well diversified, with the company sending about 3,000 five-seat SUVs, 1,400 six- and seven-seat SUVs, and 2,300 five-seat coupe SUVs to customers during the period. That brought total lifetime delivery counts of the three models to more than 109,500.

However, NIO did complain that its results suffered from semiconductor chip shortages. The company believes it will be able to make up for missed deliveries from May this month, and it repeated its guidance for 21,000 to 22,000 vehicle deliveries in the second quarter. Yet chip worries are something that we've heard throughout the auto industry, and it's disheartening to hear NIO suffering from its impact as well as larger legacy automakers.

XPeng charges up

Meanwhile, shares of XPeng moved higher by 5%. However, in some investors' eyes, XPeng outshone its Chinese rival NIO with encouraging monthly results.

XPeng is catching up very quickly to NIO on the delivery front. XPeng delivered almost 5,700 vehicles in May, which was almost six times the number from last May. Those counts included 3,800 P7 sedans and 1,900 G3 compact SUVs. The figures for May pushed XPeng's year-to-date deliveries to more than 24,100 units.

In particular, XPeng noted the perceived customer value of its XPILOT 3.0 and Navigation Guided Pilot highway services, which offer driver assistance functionality. XPeng sees those features improving in the future as well as providing valuable recurring revenue for the company in the years to come.

The challenge with both XPeng and NIO is that their valuations are extremely high compared to current sales. It's likely that given the size of the Chinese EV market and the importance of the electrification initiative around the world, strong growth rates can last well into the future. Investors are clearly banking on that trend continuing and on first-movers like NIO and XPeng being able to hold off newer competitors in the years to come. It's too early to be sure whether the two Chinese industry leaders will be able to pull off that feat, but shareholders today seem confident in their ability to sustain business success indefinitely.