NIO, XPeng, and other Chinese EV stocks surge on strong sales forecast as Tesla stumbles amid weak demand

Shares of Chinese electric-vehicle makers surged in Hong Kong on Tuesday, driven by strong sales forecasts for March and a sharp selloff in Tesla’s stock overnight.

NIO’s shares jumped 8.7% by midday, while XPeng rose 6.2%.

Zhejiang Leapmotor Technology and Great Wall Motor climbed 4.9% and 1.65%, respectively, outperforming the Hang Seng Index, which was down 0.9%.

The rally followed robust monthly sales figures from Chinese EV makers, in stark contrast to Tesla’s struggles in the US market.

Analysts expect demand in China to remain strong throughout March, with automakers rolling out new models after the Lunar New Year holiday.

Local government incentives aimed at boosting consumption are also expected to provide additional support.

Leapmotor and XPeng lead gains

Among the biggest winners, Leapmotor’s shares surged after the company posted its first-ever quarterly profit.

It reported a net profit of 80 million yuan ($11 million) in the fourth quarter—one year ahead of schedule.

The company’s gross margin reached a record 13.3%, signaling improved efficiency and cost management.

XPeng also benefited from positive sentiment, with Citi upgrading its stock rating to “buy” from “neutral.”

Analysts at Citi cited strong February orders and the company’s increasing focus on artificial intelligence and robotics as key drivers of future growth.

The EV maker also benefitted from announcements of humanoid robots investment.

XPeng views humanoid robots as a long-term endeavour and is considering significant investments that could reach up to 100 billion yuan ($13.8 billion), according to a report by state media Securities Times on Monday, which cited the company’s CEO.

The EV maker ventured into the humanoid robotics sector in 2020 and introduced its humanoid robot, Iron, in November, positioning it as a competitor to Tesla’s Optimus.

China’s EV market is strong

Tesla shares fell 15% on Monday, marking their steepest decline in four years and erasing gains made after the US presidential election.

Investors have been rattled by weaker-than-expected sales data and concerns over CEO Elon Musk’s potential role in the Trump administration.

While Tesla struggles, China’s EV market is showing resilience.

The China Passenger Car Association (CPCA) reported that February retail sales of new-energy vehicles, including battery electric vehicles and plug-in hybrids, soared 80% year-over-year to 686,000 units.

Analysts believe this momentum will continue into March as automakers ramp up production and introduce new models to meet demand.

Tesla China sales decline

Tesla’s sales in China continued to decline in February, with the company selling 30,688 vehicles, including 3,911 exports, according to CPCA data.

The domestic market saw a drop to 26,777 units, an 11.16% decrease from the same period last year and a 20.55% decline from January.

Industry analysts attribute the weaker numbers to the Chinese New Year holiday, which disrupted production and consumer activity.

Additionally, Tesla temporarily suspended some production lines at its Shanghai plant to optimize manufacturing processes for its updated Model Y.

Tesla’s Shanghai facility remains a crucial hub for the automaker, producing the Model 3 sedan and Model Y crossover for both domestic sales and international exports.

However, growing competition from domestic EV makers is putting pressure on Tesla to maintain its market share in China.

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