What happened
After ending last week near where they began, shares of Nio (NIO 1.04%) are taking a different route today, charged up and heading higher. News that the Chinese government is energized to spur growth of clean energy businesses is behind the stock's rise.
As of 1:26 p.m. ET, shares of Nio had risen 12.6%.
So what
Attempting to reinvigorate its lagging economy, the National Development and Reform Commission (NDRC), a government agency responsible for economic development in China, stated that it's interested in bringing private capital to assist in the advancement of major projects throughout the nation.
The NDRC identified a variety of sectors in which it hopes to spur growth including transportation and clean energy.
It's unsurprising that news of the Chinese government's focus on economic development, specifically in areas that pertain to Nio, is being celebrated by investors today. The company reported uninspiring second-quarter 2023 deliveries of 23,520 vehicles -- a year-over-year decline of more than 6%.
Dwindling demand for Nio's vehicles comes at a particularly bad time as the company recently launched two new models: the ET5 midsize sedan and the ES8 sports utility vehicle.
Now what
The Chinese government's motivation to spark clean energy and transportation businesses is undeniably good news for Nio, and investors will certainly want to pay attention to see if the NDRC succeeds in developing projects that benefit.
But it's not only China that investors should watch. Nio recently reported that it closed on an equity investment of nearly $740 million from CYVN Investments, an investment group owned by the Abu Dhabi government. While demand for its vehicles in China may have fallen recently, it's possible the electric car company may find growing demand in the Middle East.
