What happened

Nio (NIO -9.16%) shares jumped early today for the second day in a row. Yesterday, Nio shares rose nearly 4%, and that trend continued this morning. In early Tuesday trading, Nio popped as much as another 8.3% before those gains faded. As of 11:53 a.m. ET, Nio held onto a slight gain of 0.2%. But there was good reason for the early optimism. 

So what

Chinese electric vehicle (EV) maker BYD announced strong guidance for third-quarter earnings that drove its stock higher today. That EV maker said it expects third-quarter net profit to more than quadruple year over year to as much as $820 million, according to The Wall Street Journal.

That bodes well for what Nio and other Chinese EV makers will have to say in upcoming earnings releases. Warren Buffett's Berkshire Hathaway has been an owner of BYD shares since 2008. At the end of last year, Berkshire owned 7.7% of BYD. Earlier this year, there was speculation that Buffett may be exiting that position, but in fact only sold less than 1% of his holdings. 

Blue Nio ET7 electric sedan in front of city skyline.

Image source: Nio.

Now what

Yesterday's jump in Nio shares came after Chinese Premier Xi Jinping expressed strong support for investments in new technologies at the Chinese Communist Party meeting over the weekend. He framed it as a major focus for the county's economy by 2035, and EV makers are a likely target of those investments. 

Today, investors are focusing on how the business might be growing in the short term as well. Nio hasn't announced a date for reporting third-quarter financial results, but it did report a 29% jump in vehicle deliveries for the period versus last year. While much of this morning's pop dissipated, if Nio has the kind of successful third quarter that BYD is expecting, there could be more room for the shares to run.