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Why Nio Stock Rebounded Today

By Howard Smith – Aug 18, 2021 at 12:48PM

Key Points

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The Chinese government said something that might be good news for Chinese electric vehicle makers.

What happened

Shares of Nio (NIO 0.86%) have been on a steady decline over the past seven trading days. There are several reasons the stock dropped about 15% in that time period, but it rebounded today, rising as much as 2.4% before settling to a gain of 2% as of noon EDT. 

So what

Nio reported its quarterly financial results last week, and some investors weren't adequately impressed. The automaker has also been caught in a net of U.S.-listed Chinese names that have taken hits due to Chinese government regulators who have taken aim at certain technology industries. But the latest word from China's leadership could turn into a tailwind for the electric vehicle (EV) industry

Driver taking a Nio customer experience inside a vehicle.

A customer in a Nio. Image source: Nio.

Now what 

Chinese state media said that President Xi Jinping recently spoke at an economic meeting discussing how the country would aim to spread wealth to more citizens, and curb "excessive incomes," CNBC said. The report included a translation from the meeting that said the plan is for "reasonable adjustment of excessive incomes and encouraging high income groups and businesses to return more to society."

It's impossible to know exactly what China's president and Communist government have in mind. But if it results in more of the population of the largest automotive market in the world having additional discretionary income, it could bode well for EV sellers there.

Nio sells three SUV models, and plans to launch a luxury sedan early next year. The company also said it will announce another two new products in 2022. If more Chinese citizens are able to become customers, investors may be thinking it could be another future tailwind for Nio and other EV makers. 

Howard Smith owns shares of NIO Inc. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Nio Stock Quote
Nio
NIO
$13.24 (0.86%) $0.11

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