NIO stock gains as China’s Ministry offers tax breaks for new EV owners

NIO stock gains as China’s Ministry offers tax breaks for new EV owners

Over the past weekend, China introduced new Covid-19 restrictions, which had a negative effect on electric vehicle (EV) makers’ stocks on Monday. NIO Inc.’s stock (NYSE: NIO) slid 3.2%, Xpeng Inc. shares (NYSE: XPEV) shed 4.9%, and Li Auto stock (NASDAQ: LI) gave up 3.8%.

China’s Ministry of Commerce announced new steps to support automobile sales in the nation, including extending a tax break and boosting credit options. The Chinese government also plans to invest in more charging stations and is considering extending tax exemptions for new energy vehicles. 

Meanwhile, Mizuho analyst Vijay Rakesh has cut the stock target for NIO. According to Rakesh, a handful of factors, specifically the COVID-19 shutdowns in China, played a role in his cutting of prices for NIO from $55 to $48 per share. Although, he is still positive about the growth of NIO. 

NIO chart and analysis 

Over the past five days, the stock price has been flat while remaining above the 20-day and 50-day Simple Moving Averages (SMAs). The trading volume has also been flat, with a trading range between $20 and $24.

NIO 20-50-200 SMA lines chart. Source. Finviz.com data. See more stocks here.

On Wall Street, analysts rate the shares a strong buy, predicting that the average price in the next 12 months could reach $33.66. This is 58.77% higher than the current trading price of $21.20.

Wall Street analysts’ price targets for NIO. Source: TipRanks    

Auto purchases in China

Auto purchase tax for cars priced under 300,000 yuan ($45,000) with 2.0-liter or smaller engines will stay at 5%, while many EV and hybrid models will continue to have no tax applied, which in turn should help boost the demand for EV’s.

China seems to want to push its economy into net-zero emissions by giving additional tax breaks for EV purchases while simultaneously boosting its economy and industry. 

Native manufacturers have been liable for 50.1% of retail gross sales, luxurious manufacturers have been 28%, and mainstream three-way partnership manufacturers have been 4.5%.

NIO is certainly a significant player and a rival to producers in the west, with the company’s shares gaining some ground recently, it may well be worth keeping a close eye on.

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Source: https://finbold.com/nio-stock-gains-as-chinas-ministry-offers-tax-breaks-for-new-ev-owners/