Nio (NYSE: NIO), the Chinese electric vehicle (EV) manufacturer, has been enjoying a remarkable surge in its US-listed shares, skyrocketing by over 40% in the past month, catching the attention of those investing in the future of automotive mobility.
Although the broader EV market’s strength has contributed to Nio’s recent rally, there are distinct factors fueling this stock’s impressive performance, raising expectations for further growth throughout this month.
China’s clean energy push and tax breaks
In June, the Chinese government introduced a $72.3 billion package of tax breaks that will last until 2027, aimed at boosting sales growth in electric vehicles and other green cars.
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The move came as China aims to address the issue of waning auto sales, which could further impact the country’s economic growth.
The tax breaks could lure a fresh string of EV buyers in China, and ultimately elevate sales in local carmakers, including Nio. Stronger sales mean better positive sentiment among stock investors, which is precisely why this could become a considerable catalyst for NIO stock going forward.
More recently, a Chinese government agency responsible for economic developments announced last month that it plans to lure more private capital aimed at driving the growth of several key industries, including transportation, clean energy, and infrastructure.
It is unclear which specific projects are set to benefit the most from this program. Nevertheless, the initial reaction among NIO investors was highly positive.
Nio car deliveries hit an all-time high
On August 1, Nio revealed its delivery numbers for July, showing that the Chinese carmaker sold a total of 20,462 EVs during the month, representing a year-over-year increase of nearly 104% and a new all-time high.
The July deliveries roughly doubled the figures reported a month earlier and were considerably better than its rival electric automaker Xpeng, which delivered 10,008 in July.
Nio’s rapidly-growing deliveries highlight the mounting consumer interest in the company’s electric sedans. If the company manages to retain such demand, it could capture the attention of a broader audience in the stock market.
New vehicles
Naturally, one single factor that has the highest impact on a company’s stock is its product. Notably, Nio has been highly active when it comes to new product launches.
In May, the carmaker released the updated version of the ES6 SUV and ET5 sedan, which was well-received by consumers and investors alike.
Moreover, the company also reportedly intends to launch the long-awaited ET5 Touring in the UK in 2024. This vehicle model is expected to compete with powerful machines such as the Porsche Taycan and the BMW i5 Touring.
Meanwhile, Nio reduced the prices of its vehicles by around $4,200 in June, representing roughly 10% of the starting price of some of its cars. The price cuts could also be one of the factors that stimulated demand to some extent.
NIO stock price analysis
At press time on August 3, shares of NIO were trading at $14.57, down around 0.4% over the past 24 hours.
However, the stock secured robust gains on the weekly and monthly charts of more than 17% and 43%, respectively.
Nio’s price action is clearly in a bullish mode, now heading to the next line of resistance around $16-17.
A break of this zone would open the door for an accelerated move toward the next resistance level, which is the 100-day moving average (DMA) at $18.60, followed by the 200-DMA at $21.42.
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