Nio's stock dives, even though new U.S. tariffs on China EVs aren't a concern

By Tomi Kilgore

The EV maker's stock pulls a sharp U-turn to give back most of the gains seen in recent days

Shares of Nio Inc. pulled a U-turn to trade sharply lower Wednesday, wiping out the bulk of their gains made in the wake of the Biden administration's new tariffs on electric-vehicle imports from China.

The selloff comes even as analysts say the new tariffs aren't expected to have much impact, if at all, on China-based electric-vehicle makers.

Nio shares (NIO) sank 44 cents, or 7.6%, in afternoon trading, reversing an earlier gain of as much as 4.5%. The stock's intraday high of $6.05 was the highest price seen during regular trading hours since March 13.

The stock had run up 72 cents, or 14.2%, over the past two days.

Read: Nio, Alibaba shares jump as China breakout rally looks set to continue: analyst

The highly anticipated tariffs announced by the Biden administration on Tuesday include a quadrupling of the tariff on EVs imported from China, to 100% from 25%. There's already an additional 2.5% tax on all automobiles imported into the U.S.

J.P. Morgan analyst Nick YC Lai said the new tariffs aren't likely to have much of an affect, if any, on the operations or finances of China-based automakers, because none of them sell any cars directly into the U.S. market.

"Ever since the Trump administration imposed an additional 25% to tariffs on Chinese car exports to the U.S. back in 2018, Chinese [original-equipment manufacturers] have reduced exports to the U.S. dramatically, and now have zero exposure," Lai wrote in a note to clients.

Lai did note, however, that China-based EV makers could be hurt if the U.S. extends its tariffs to cars made by China-based companies in other countries, such as Mexico or Brazil.

Currently, BYD Co. Ltd. (BYDDY) (HK:1211) (CN:002594) and Great Wall Motor Co. Ltd. (HK:2333) are developing production capacity in Brazil, mainly in the form of assembly lines that are slated for completion by around 2026, Lai noted.

BYD's U.S.-listed shares fell 0.9% on Wednesday, after easing 0.2% over the past two days.

Elsewhere, Li Auto Inc.'s stock (LI) lost 1.9% Wednesday, after shedding 1.1% in the previous two days, while XPeng Inc. shares (XPEV) gave back 2.7% after running up 7.1% over the past two days.

The decline in EV makers' shares comes even as the iShares MSCI China ETF MCHI climbed 0.7% toward a nine-month high on Wednesday, while the S&P 500 index SPX rallied 1% toward an all-time high.

-Tomi Kilgore

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05-15-24 1427ET

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