Chinese electric vehicle stocks Nio (NIO +10.1%), Li Auto (LI +9.0%), and XPeng (XPEV +6.7%) broke higher in early trading on Tuesday as investors dip back in again following the sharp selloff on Monday.
The COVID news out of Shanghai was improved with 96.3% of industrial businesses tracked by the government reported to be back to operating, with a production rate above 70%. Vice Minister Xin Guobin told reporters that auto industry production is steadily increasing in Shanghai and the neighboring provinces of Jiangsu, Zhejiang and Anhui. That read is also positive for the auto supply chain in general.
Tesla (NASDAQ:TSLA +0.4%) is also back in positive territory. Morgan Stanley thinks the focus on if Tesla (TSLA) will meet Q2 deliveries expectations may be overdone. "As Tesla has shown throughout its history, it can make up substantial lost ground with accelerated deliveries into the close of a quarter where disproportionate amounts of a full quarter’s production can occur in the final week or two," noted analyst Adam Jonas. "Additionally, what may be lost in 2Q could just provide pent-up sequential tailwinds for 3Q results," he added. Morgan Stanley has an Overweight rating on TSLA and price target of $1,300.
Watch for another EV sector catalyst on Wednesday when Nio (NIO) holds a product launch event. Shares of Nio have jumped after similar events in the past.