Chinese electric vehicle (EV) makers such as BYD (OTCMKTS:BYDDY) and Nio (NYSE:NIO) have certainly seen very different market reactions to their impressive growth rates. BYD has turned into a dominant China-based player in the global EV market. A more regional and pure-play EV stock focused on the domestic Chinese market, Nio hasn’t seen the same sort of tailwinds in recent years.
That said, there has been some intriguing commentary made from Chinese EV makers in recent interviews today. The Secretary General of the China Passenger Car Association (CPCA) recently noted that the country’s largest players (such as BYD and Nio) have plans to continue investing in Europe. This comes amid news that the European Union appears to be considering tariffs on Chinese-made cars due to dumping concerns.
Let’s dive into what this news may mean for investors in these two stocks and what to make of the shifting geopolitical environment right now.
BYD, NIO Stock Could See Heightened Volatility
U.S.-listed Chinese stocks have certainly seen a great deal of volatility in recent years. Unfortunately for companies like Nio, most of this volatility has been to the downside, with NIO stock continuing to slide in today’s session on concerns around potential EU tariffs.
Now, the company does appear to remain intent on developing its footprint in the European market and won’t likely be deterred by tariffs. However, given the Biden administration’s willingness to more than double tariffs on certain Chinese EVs, it’s clear that there’s some pressure building for companies to insulate their home-grown supply chains.
For companies like Nio that are focusing on Western growth markets for future expansion, that’s not great. For companies like BYD that have a much broader and more established presence in key emerging market countries around the world, these sorts of headlines don’t really matter. That’s where I think the performance divergence is coming from between these two examples of top Chinese EV stocks.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
