Shall We Invest In Nio Amid Rising Gas Prices?

Nio stock slid after its February report showed slowing sales compared to the previous month.
Mar. 10, 2022 23:30
Shall We Invest In Nio Amid Rising Gas Prices?

A year ago, gas price in San Francisco was just over $3 per gallon, but today, the price is above $5 per gallon and experts say it will continue to rise throughout the year.

With the rising gas price, many people including myself are thinking of switching to electric vehicles. That's why stocks like Tesla rebounded nicely these days. However, Chinese electric vehicle maker Nio was not as lucky. Why is Nio underperforming Tesla?

Nio stock slid after its February report showed slowing sales compared to the previous month.

Nio announced Monday that it saw a 10% increase in vehicle deliveries in February compared to the same time last year. Deliveries in 2022 are also up over 23% year over year. Although its numbers are rising, the growth is much smaller than the 34% year over year increase the company reported in January. Will this trend continue? Probably yes until its second manufacturing facility in Hefei become operational in the third quarter of 2022.

On top of the report, EV competitor Rivian announced that it could be raising its vehicle prices even for buyers who already have vehicle reservations in order to offset production costs. The announcement could have drawn concerns that other Chinese automakers like Nio will follow suit.

Nio stock fell by as much as 5.6% after its announcement, but evened out by the end of the day, currently down 0.46% trading at $21.77. Rivian didn't see a recovery, closing down 13.49% at $53.56.

However, Tesla's sales numbers are stronger than ever. According to electrek, "Tesla is dominating car sales in California with impressive growth in 2021 that has resulted in having 2 of the top 5 best-selling cars in the state."

Nio also filed for a dual secondary listing this week, aiming to trade on both the Stock Exchange of Hong Kong and the Singapore Exchange. The move comes amid rising regulatory risks for U.S.-listed Chinese companies, but Nio said that it doesn't believe its primary listing in New York will have an adverse effect on business, and it plans to remain U.S.-traded. Nio's secondary listing has also been expected for some time. Its Chinese counterparts, Li Auto (Nasdaq: LI; HKEX: 2015) and XPeng (NYSE: XPEV; HKEX: 9868), are already dually listed, having gone public in Hong Kong in mid-2021.

The question right now is - will Nio eventually delist from the U.S. and switch to Hong Kong for good? Hard to say. But one thing is for sure, if you want to hedge high gas prices and pick a company in the EV industry to invest in, Tesla is a better choice.