What happened
Nio (NIO -0.48%) shares reversed a recent slide today, jumping as much as 11% this morning. The stock pared some of those gains, but remained 7.7% higher as of 1:15 p.m. ET.
So what
Nio shares have been under pressure this week as uncertainty has grown regarding potential lockdowns in China to curb a new wave of COVID-19 infections. This includes in Anhui Province, where Nio's production facilities reside. But shares got a boost today for another reason. The Chinese government looks to be renewing its support for new-energy vehicles, which includes battery-electric and plug-in hybrid vehicles.
Now what
Today, the Chinese Ministry of Commerce issued an announcement supporting automakers and the sale of both new and used vehicles. The notice also indicated that subsidies for new-energy vehicles will be extended, according to Barron's.
That's good news for Nio and other Chinese electric vehicle (EV) makers that are recovering from production delays stemming from recent pandemic-related lockdowns. Those lockdowns impacted Nio's supply chain, resulting in just 12,098 vehicles being delivered in April and May combined. The company recovered from those delays in June, however, with more than 12,900 deliveries in that month alone.
Government subsidies have spurred strong demand for EVs in China. But they have been declining in value over time, and were scheduled to expire this year. An extension would be great news for Nio, which has worked to double its production capacity over the past year.
In addition to the subsidies, the government said it would "actively support the construction of charging facilities" and work to reduce charging fees. China is the largest automotive market in the world. Added support to continue driving demand for EVs is great news for Nio, and has investors looking to buy shares today.
