Chinese EV Stocks through Technical Analysis
The earnings outlook for Chinese electric vehicle makers remains dire even though electric cars now make up more than half of new auto sales in the mainland market, as brutal price competition rages on. Only two home-grown companies, BYD and Li Auto, are profitable, leaving around 30 rivals under pressure to stem losses despite upbeat sales forecasts in the world's largest automotive market.
NIO
Chinese electric car company Nio said Tuesday it plans to install battery charging stations in every one of China's 2,844 counties by the end of June 2025.
The company also announced plans to expand its battery swap stations to more than 2,300 of China's counties by the end of 2025.
NIO daily chart
Over 50% drop in NIO's share price since 2024. An obvious downtrend for this EV stock since 2021 from its peak at around 65 USD. As shown in the chart above (orange coloured downtrend line), even for mid term, Nio seems will continue to retrace towards 3.63 USD. And as predicted, Nio retraced to this support level and formed a double bottom now. I believe here is the bottom for Nio and a rebound is highly possible in the near term. Bullish vote for Nio $NIO Inc.(NIO)$
XPENG
XPeng forecasts third-quarter revenue below expectations and missed June-quarter sales estimates on Tuesday, hurt by stiff competition and a drop in demand for its aging line-up of pricey electric vehicles. The company, however, expects to deliver between 41,000 and 45,000 vehicles in the third quarter, slightly above 40,008 units a year earlier.
Xpeng daily chart
For Xpeng, its movement was slightly stronger than NIO, at least it was still on a uptrend since early May 2024. However, thing might totally change for Xpeng soon, since early August, its share price fell below its uptrend line support, as indicated in Orange coloured line. This is a critical level to monitor, if the share price is unable to stand back the uptrend line, we would see further drop in Xpeng share price next week. For such, I remain bearish for Xpeng $XPeng Inc.(XPEV)$
LI
Li Auto has reached the 900,000 cumulative deliveries milestone, 56 months after the delivery of its first vehicle. The new energy vehicle maker announced the progress today, saying it's the first Chinese new car maker to reach the milestone.
Li Auto daily chart
Technical wise, as compared to Nio and Xpeng, Li experienced a much more stable share price movement since the end of May 2024. Recently, a higher low pattern was formed in Li technical chart, as drawn in blue above. This might be a trend reversal indication for LI auto, which is definitely a great news for its investors. In addition, the share price recently breaks above its EMA50 resistance and all the EMA like 10, 25 and 50 begin to curve upwards. Therefore, a bullish vote for $Li Auto(LI)$
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Based on the technical analysis provided, here is an overview of the Chinese EV stocks mentioned:
NIO (NIO):
NIO's share price has experienced a significant drop since 2024, forming a clear downtrend.
The stock has retraced towards a support level at around $3.63 USD and formed a double bottom pattern.
The analyst believes that this could be the bottom for NIO and a rebound is highly possible in the near term.
A bullish vote is given for NIO based on the technical analysis.
XPeng (XPEV):
The uptrend line for XPeng has been broken, indicating a potential further drop in the share price.
The analyst remains bearish for XPeng based on the technical analysis.
Li Auto (LI):
Li Auto has reached the milestone of 900,000 cumulative deliveries, making it the first Chinese new car maker to achieve this.
The share price movement of LI has been more stable compared to NIO and XPeng.
A higher low pattern has been formed in the technical chart, indicating a possible trend reversal.
The share price has broken above its EMA50 resistance and the EMAs (10, 25, 50) are curving upwards.
A bullish vote is given for LI Auto based on the technical analysis, with a note to pay attention to its upcoming earnings.
When considering investing in US or China EV stocks, it is important to evaluate various factors beyond technical analysis. Some reasons to consider investing in Chinese EV stocks may include:
China's large and fast-growing domestic market for electric vehicles.
Government support and subsidies for the EV industry in China.
Potential for further innovation and technological advancements in the Chinese EV sector.
The opportunity to invest in established Chinese EV companies such as NIO and Li Auto, which have shown growth and potential profitability.
However, it is also important to consider the risks associated with investing in Chinese EV stocks, such as regulatory uncertainties, competition, and geopolitical tensions. It is recommended to conduct thorough research and seek professional financial advice before making investment decisions.
Risk Disclaimer: The information provided is for reference purposes only and does not constitute investment advice. Investing in stocks involves risks, including the potential loss of principal. Users are solely responsible for their own investment decisions and should consult with a financial advisor before making any investment decisions.
How about the other Chinese tech stocks like $Baidu(BIDU)$ $Alibaba(BABA)$ ?