Chinese Stock

Chinese Stock Market Rebounds as Lockdown Measures Ease, Driving Optimism in The Electric Vehicle Sector

Following the easing of lockdown measures in China, stocks in the Chinese markets experienced a significant bounce back. The country’s leading electric vehicle manufacturers reported a substantial increase in vehicle deliveries throughout June, contributing to renewed confidence in the sector.

Tesla Inc. (TSLA) played a pivotal role in boosting sentiment towards the electric vehicle industry as the company achieved record-breaking vehicle deliveries in the second quarter.

During midday trade, Hong Kong-listed shares of Li Auto Inc. (2015.HK), Nio Inc. (9866.HK), and XPeng Inc. (9868.HK) (XPEV) surged between 7% and 14%, leading to a nearly 2% rise in the broader Hang Seng index.

XPeng (XPEV) emerged as the top performer among the Chinese electric vehicle makers, with a remarkable 13.6% increase in stock value. The company’s success was attributed to a notable 15% month-on-month growth in deliveries throughout June. Similarly, Li Auto (LI) achieved record deliveries during the same period.

Nio (NIO) experienced a significant boost in deliveries, with a remarkable 75% surge in June compared to the previous month.

With the support of Berkshire Hathaway (BRK-A), BYD (1211.HK) saw a nearly doubled sales volume in June, which caused a 3.4% increase in their Hong Kong shares.

The revival of Chinese deliveries follows several months of sluggish sales and reflects the intensified competition in the market resulting from a price war earlier this year. Price reductions initiated by Tesla triggered similar responses from both electric vehicles and traditional automobile manufacturers, all aiming to secure a larger market share in China.

Although Tesla does not disclose separate Chinese sales figures, the China Passenger Car Association’s data consistently shows a rise in mainland sales throughout this year. Tesla announced that it delivered approximately 466,000 vehicles in the second quarter, surpassing Wall Street estimates of 448,350 deliveries.

Chinese electric vehicle sales have emerged as one of the few bright spots in the Asian economy this year, demonstrating consistent growth despite the slowdown in other sectors. Conversely, overall vehicle sales in the world’s largest automobile market have experienced a deceleration.

In response to the challenging circumstances, the Chinese government implemented various measures to support the automotive sector. Recently, Beijing unveiled a substantial $72 billion tax break specifically aimed at promoting the adoption of electric vehicles.