Donald Trump had a busy first day in office, revoking former President Biden’s executive orders and announcing new measures that continue to send shockwaves through multiple industries. One thing missing from his remarks was tariffs on China, something that was a big part of his election campaign.
Has Trump’s stance on China tariffs softened now? Is this a strategic move to tone down his aggressive stance on China in order to continue business relationships with the Asian country? We believe the President is intentionally taking a softer stance and this sentiment is echoed by Chinese stocks as well. We looked at some Chinese EV stocks that enjoyed a good day of trading in the absence of tariffs on China on Tuesday.
To come up with the list of 5 EV winners of Trump’s softened stance on China tariffs, we only considered stocks with less than a $25 billion market cap.
5. Li Auto Inc. (NASDAQ:LI)
Li Auto is a little-known but highly successful EV maker that could provide serious competition to the likes of Tesla and BYD. The company’s third-quarter deliveries were up 45% YoY, coming in at 152,831 vehicles. The sales grew at a growth rate of 28.4%.
The EV maker is also pursuing AI ambitions. It incorporates AI technology into its vehicles to achieve autonomous driving. Apart from that, it has serious ambitions in robotics and other AI technologies as well. The company’s investments in AI integrations in its vehicles give it a head start over competitors.
Li Autos stock is so undervalued that it trades just around one times sales. The obvious risk is that it is a Chinese stock and could become entangled in a trade war. However, when Trump didn’t double down on China tariffs on his first day in office, the stock went up by over 5%, signaling further upside ahead.
4. Niu Technologies (NASDAQ:NIU)
Niu Technologies manufactures scooters, bicycles, mopeds, and electric motorcycles in China. The company has a distribution network in 53 different countries, making it a strong global player despite its small size. It has a per-year production capacity of two million units.
The company’s growth within China continues to be impressive, with a growth rate of 12.5% for its scooters division. On the global stage, the company’s e-scooter sales grew by 17.5% in the third quarter. The company’s new line of scooters is available in the US and Europe and is poised to contribute significantly to its future growth.
The stock is down almost 50% from its October highs, presenting a good opportunity for investors hunting for multi-bagger stocks.
3. ZEEKR Intelligent Technology Holding (NYSE:ZK)
ZEEKR stock shot up nearly 4% yesterday as Trump softened his stance on China tariffs. The company is a strong competitor of Nio in China and continues to threaten competition through strategic collaborations with US companies.
The company was established in 2021 and immediately met success when it collaborated with Waymo for the development of robotaxis. Later, it also started working with Mobileye (MBLY) and CATL. These partnerships say a lot about the company’s technology which continues to evolve and pose serious competition to both Nio and Tesla.
The stock’s recent downfall could be attributed to restructuring as well as an underwhelming performance compared to peers. The stock is risky but with the backing of Geely Automobile, a majority shareholder, the stock could make a comeback soon.
2. XPeng Inc. (NYSE:XPEV)
XPEV stock is on a roll with a 60% performance in the last year. Earlier this month, the company reported a 52% YoY surge in vehicle deliveries which was quite impressive. The management believes this trend should continue, especially with the recent launch of its M03 and P7+ models.
Even though the company has had negative margins up until recently, it is still well supported by a cash buffer of $5.09 billion. This enables the company to aggressively pursue its ambitions without worrying about funds. This financial strength is one reason for the company’s optimistic plan to expand to 60 markets globally in 2025 from the current 30. As long as Trump doesn’t spoil the plans, the company should be able to pull this off.
1. NIO Inc (NYSE:NIO)
Nio stock was down 4% yesterday, not depicting the same enthusiasm that other Chinese EV stocks did after Trump’s softened stance on tariffs. That’s because the company has a lot more on its plate than just tariffs. The stock is down 30% in a year and the business performance doesn’t inspire much confidence in the short-term, though the company could turn that around.
NIO’s biggest headache is its shrinking cash position. That is unlikely to improve unless the company innovates to thwart competition from the likes of Tesla and other Chinese EV companies. Even though its cash is at similar levels as Xpeng, it has already burnt through $1.7 billion in the first three quarters of the year.
There are still some positives for investors to look forward to. For example, the recent joint venture with CYVN Holdings targets the North African and Middle Eastern markets. There is also the partnership with Mastercard which enables the company to expand into international markets. We still don’t know the financial impact of these deals but if the management pursues these ambitions successfully, these offer the new growth opportunities that the company needs to stop its decline.
NIO is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held NIO at the end of the third quarter which was 20 in the previous quarter. While we acknowledge the potential of NIO as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NIO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
