This morning, shares of Chinese electric vehicle stocks Nio (NYSE:NIO), XPeng (NYSE:XPEV) and Li-Auto (NASDAQ:LI) are all in the red, partly due to the acceleration of Covid-19 cases. Currently, the city of Shanghai and its 25 million inhabitants are confined; yesterday, Shanghai reported 26,087 new cases. Guangzhou City has also started to put in place Covid-19 restrictions after 20 cases were reported last week. As a major trade hub, a lockdown in Guangzhou could further aggravate supply chain issues.
That said, news of the lockdown isn’t the only factor dragging down Chinese electric vehicle (EV) stocks today. Here’s what investors need to know.
Why are Chinese electric vehicle stocks NIO, LI and XPEV down today?
Over the weekend, Nio announced it was suspending electric vehicle production due to new Covid-19 restrictions. The company explained the following:
“Since March, due to epidemic-related reasons, the company’s supplier partners in multiple locations, including Jilin, Shanghai and Jiangsu, have suspended production one after another and have yet to recover.”
Nio is not alone, however. End of March, You’re here (NASDAQ:TSLA) also closed its Shanghai production plant due to assembly cases. Meanwhile, XPeng and Li Auto have yet to announce any electric vehicle production suspensions.
According Barrons, Nio manufactures its vehicles in Xinqiao, Hefei, about 300 miles from Shanghai. Nio also said deliveries to customers may be delayed “in the near future.”
Nio, Li Auto and XPeng announce price increases
In addition to the recent suspension of production, Nio also recently announced that it will raise prices for three of its models due to rising raw material costs. Specifically, the ES8, ES6, and EC6 will each increase by around $1,570 each. This price change will take effect on May 10. However, the prices of its ET5 and ET7 models will remain the same. Nio CEO William Li had the following to say:
“Originally [we] I thought we could take it, but now with this pandemic it’s even harder to take […] We have no alternative but to raise prices. Please be understanding.
Previously, Nio said he had no plans to raise prices “in the near term” at the end of March. However, the surge in Covid-19 cases and ongoing supply chain challenges appear to have caused the company to backtrack on its statement.
However, NIO is not the only pick among Chinese EV stocks that has had to raise prices. Both XPeng and Li Auto raised the prices of their own electric vehicles in March. XPeng reported a price increase between $1,580 and $3,150. Meanwhile, Li Auto has raised prices by around $1,850.
At the date of publication, Eddie Pan held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.