NIO Stock and XPEV Stock: New Markets Amid Tariff Fears

Nio [NIO] and XPeng [XPEV] are Chinese electric vehicle (EV) makers. 

According to data from the China Passenger Car Association, neither manufacturer was in the top 10 automakers by sales of new energy vehicles in China in October 2024. The leading brand was BYD [BYDDF], with a 36.1% market share, while Geely [GELYF] was second with a share of 8.9%. 

This stock spotlight will look at how Nio and XPeng have been expanding into new markets against a backdrop of potential new tariffs. It will also compare the two companies’ recent sales and present a bull case and bear case for both. 

Nio and XPeng Enter New Markets 

On November 15, XPeng announced that it had signed an agreement to bring its G6 SUV to UK roads in early 2025. 

“With a vision for artificial intelligence-defined mobility, we aim to revolutionize the driving experience in the UK, making it safer, smarter, more sustainable and more pleasant in the near future,” said Alex Yang, Head of International Business at XPeng, in a press release. XPeng also launched in Nepal earlier that week.

Meanwhile, Nio has announced its entry into the Azerbaijan market. Lihong Qin, Co-Founder and President of Nio, said: “Azerbaijan is making strides in green transition and sustainable development, and its promising new energy vehicle market is flourishing with opportunities.”

The entry into new markets comes amid concerns that US President-elect Donald Trump could impose tariffs of 60% on imports from China. 

NIO Stock and XPEV Stock Fall on Tariff Worries 

Nio’s and XPeng’s share prices have tumbled 7.71% and 14.97%, respectively, in the week to November 18 on these concerns. 

NIO stock is down 36.81% in the past 12 months and has nearly halved since the start of the year. XPeng’s declines have not been as steep, falling 22.51% and 10.83% in the respective periods. 

October Deliveries Dwarfed by BYD’s 

Both XPeng and Nio are set to report their Q3 earnings on November 19 and 20, respectively. They should also provide investors with a sales outlook for Q4. 

Nio delivered 20,976 in October, up 30.50% year-over-year, albeit down from 21,181 deliveries in September, according to data compiled by CnEVPost. Year-to-date, Nio has secured 170,257 sales, up 35.05% from the January–October period in 2023. 

XPeng secured its second consecutive record month in October, delivering 23,917 vehicles, up 19.57% from October 2023 and a 12.01% increase from September. Total sales so far this year have risen 20.73% to 122,478.

Nio and XPeng’s numbers are dwarfed by BYD’s. The Warren Buffett-backed automaker sold a staggering 502,657 new energy vehicles in October, up 66.53% year-over-year and up 19.84% from September.

Here’s how Nio’s and XPeng’s fundamentals stack up against those of BYD. 

Source: Yahoo Finance 

Both NIO stock and XPEV stock could look undervalued relative to their sales growth potential, although their current P/S ratios are a reflection of the weaker sentiment China’s EV stocks have seen this year. 

NIO Stock and XPEV Stock: The Investment Case

The Bull Case for Nio and XPeng

Despite uncertainty around what Trump might implement once in the White House, the actual impact on China’s EV makers may not be as bad as feared. Some analysts believe that Beijing could act to boost domestic EV consumption.

“We think additional stimulus will be rolled out to address domestic and external headwinds in 2025 and beyond, especially once Trump’s tariff plans become clearer,” analysts including regional Chief Investment Officer Yifan Hu at UBS Wealth Management wrote in a note to clients seen by Bloomberg. 

Regardless of what Trump does, China’s EV makers are likely to accelerate any plans they have for overseas production. On November 13, He Xiaopeng, XPeng Co-Founder and CEO, said that the company is targeting establishing production facilities in countries where it sells EVs in order to “contribute to local economies”, reported South China Morning Post. 

The Bear Case for Nio and XPeng

Aside from the potential Trump tariffs, there is still the issue of the tariffs introduced by the EU. Under the rules proposed, Nio and XPeng would both face an additional 20.7% levy on top of the standard 10% import duty. 

China and the EU have been locked in talks to try to find a resolution. Reports emerged on November 16 that the two sides had reached an agreement to scale back or reverse the tariffs, citing a Weibo account affiliated with China Central Television. However, nothing has been confirmed and an official agreement could still be some way off. 

It is also important to bear in mind that neither Nio and XPeng are profitable yet. 

Conclusion 

Nio and XPeng have both been posting strong delivery numbers in recent months. However, tariff concerns could potentially weigh on both companies’ stocks for the foreseeable future. Ultimately, boosting overseas production could be key to future sales growth. 

-

OPTO’s proprietary theme relevance system maps the world’s biggest investing megatrends. For in-depth analyses of stocks with high growth potential, subscribe to OPTO Foresight.