2 EV Stocks in Focus After Delivery Numbers

Li Auto reported May deliveries of 40,856 vehicles, a 20.4% increase from April, while Nio delivered 23,231 vehicles, down from April but up 13.1% year-over-year. Despite Li Auto's strong delivery numbers and a price-target increase from Goldman Sachs to $35.30, shares of LI were down 2.3%, while NIO declined 0.8% amid concerns about a government-scrutinized EV price war led by BYD Auto.

Analysis

Chinese electric vehicle manufacturers Li Auto and Nio have released their May delivery figures, presenting a mixed picture amidst an intensifying EV price war that has drawn government scrutiny. Li Auto (LI) reported a robust 20.4% month-over-month increase in deliveries, totaling 40,856 vehicles. This strong operational performance was further supported by Goldman Sachs, which raised its price target on LI to $35.30 from $31.70. Despite these positive catalysts, LI's stock declined 2.3% to $27.69, though it has shown consolidation above the $28 level since mid-May and has appreciated approximately 16% year-to-date. Conversely, Nio (NIO) announced May deliveries of 23,231 vehicles, a decrease from April's figures but still representing a 13.1% year-over-year growth, with its new 'Firefly' brand showing decent initial traction. However, Nio's stock fell 0.8% to $3.51, marking its ninth loss in ten sessions and trading below all key moving averages between the 20- and 320-day trendlines, having been rejected at its 100-day moving average in mid-May. The stock is approaching its April 8 five-year low of $3.02 and is down 19.4% year-to-date. The broader sector sentiment appears to be tempered by concerns over the EV 'price war,' reportedly led by BYD Auto, which prompted criticism from the People's Daily, the official newspaper of China's Communist Party, regarding 'rat-race competition.' This government attention may be contributing to the subdued stock reactions despite some positive individual company data.

Key Decisions for Investors

• Investors considering Li Auto should weigh its strong May delivery growth and positive analyst revision against the current stock pullback and broader sector concerns regarding the EV price war and potential government scrutiny; the $28 support level is a key technical indicator to monitor.
• Nio's continued stock decline towards its five-year low, coupled with a month-over-month dip in deliveries and significant technical weakness, warrants a cautious stance; a break below the $3.02 level could signal further downside.
• The Chinese government's explicit criticism of the EV 'price war' introduces a significant regulatory risk for the entire sector; investors should monitor for any policy changes that could impact competitive dynamics and profitability for Chinese EV manufacturers.