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Why Nio Stock Is Lower Today

By John Rosevear – Sep 20, 2021 at 11:46AM

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The China Evergrande mess has investors worried -- and not just about China.

What happened

Shares of Chinese electric vehicle maker Nio (NIO 8.60%) were trading lower on Monday morning amid a broad-based sell-off driven by concerns around the heavily indebted Chinese property developer China Evergrande Group (EGRN.F -88.33%).  

At 11:30 a.m. EDT, NIO's American depositary shares were down about 5% from Friday's closing price.

So what

You've probably heard that Evergrande is thought to be close to bankruptcy, that the Chinese government is thought to be unwilling to bail it out, and that its failure could have broad effects on stocks in China and possibly beyond. 

Right now, it's far from clear that an Evergrande bankruptcy will have anything like the market-rocking systemic effects that we saw after Lehman Brothers failed in 2008. But Evergrande isn't the only Chinese property developer in danger of being swamped by debt, and investors seem genuinely concerned that -- while it might not be 2008 all over again -- a sectorwide collapse of China property developers could have effects far beyond the country's real-estate market. 

That's why Nio is down today, but we should note that many other stocks -- including those of other automakers with relatively little exposure to China -- are down as well. 

A Nio ES8, an upscale electric SUV, is shown exiting an automated battery-swap station.

Investors are worried about Evergrande -- but Nio's busy expanding its battery-swap network. Image source: Nio.

Now what

To be clear, there wasn't any negative Nio-specific news driving the stock lower on Monday, or any news at all from the company. But there is one small update for auto investors to ponder: According to website CnEVPost, which tracks the electric vehicle industry in China, Nio now has 479 battery-swap stations up and running in the country, up from 361 as of its Aug. 12 earnings report. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Nio Stock Quote
Nio
NIO
$13.13 (8.60%) $1.04
EVERGRANDE REAL EST Stock Quote
EVERGRANDE REAL EST
EGRN.F
$0.01 (-88.33%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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