Chinese electric vehicle (EV) maker NIO Inc. (NYSE: NIO) on August 9, its shares fell by about 5%. The Senate passing the Inflation Reduction Act could weigh on stocks.

The Inflation Reduction Act aims to extend the $7,500 vehicle tax subsidy that has been in place since 2009. However, the proposed legislation would require at least half of the raw materials and battery components used in electric vehicles to be manufactured or assembled in the United States. for credit.

The bill, if signed by President Joe Biden, could put electric car makers like NIO at a disadvantage compared to their counterparts in the electric car industry.

Moving on, the China Passenger Car Association (CPCA) also released data on vehicle deliveries in July. Based on the data, NIO, which delivered only 10,052 vehicles per month, is far behind its arch-rival BYD (BYDDF) in China. According to CPCA, BYD delivered 163,042 vehicles in July. It may also have weighed on investor sentiment, dragging shares down yesterday.

Electric vehicle stocks are already facing multiple challenges, such as supply chain disruptions and production delays due to China’s no-covid policy.

The company also faces the risk of being delisted under the Foreign Companies Accountability Act, along with nearly 270 other US-listed Chinese companies. These Chinese companies must comply with US audit requirements by early 2024 to avoid delisting.

Meanwhile, it’s not all doom and gloom for the electric car maker. Its car deliveries in July increased by 26.7% compared to last year. Deliveries include 7,579 premium Smart Electric SUVs and 2,473 premium Smart Electric Sedans.

The company is also making efforts to improve supply channels and speed up production. In July 2022, NIO saw a slowdown in production of its ET7 and EC6 due to a shortage of casting parts.

Is NIO expected to grow? Investors are weighing in

Turning to Wall Street, analysts seem bullish on NIO, which has a “Strong Buy” rating based on 11 buys. NIO’s average target price of $33.04 implies 67% upside potential.

Similarly, financial bloggers are 84% bullish on NIO. Hedge funds are also bullish on stocks because they together bought 3.5 million NIO shares in the last quarter.

Conclusion: Is NIO Stock a Buy, Sell or Hold?

NIO shares are already down about 37% year-to-date as the company’s production levels have been hit by external factors. However, this stock does inspire some optimism with a decent delivery number in July. In the meantime, investors may be wise to take a wait-and-see approach as the current landscape of the electric vehicle industry is impacted by the Inflation Reduction Act, the uncertainty of COVID-19, supply chain disruptions and other macroeconomic issues.

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