Xpeng, NIO, and Li Auto Stocks Decline as European Union Launches Anti-Subsidy Investigation

Xpeng Inc, NIO Inc, and Li Auto Inc experienced a decline in their stocks following the European Union’s announcement of an “anti-subsidy” investigation into Chinese electric vehicle (EV) manufacturers. Xpeng stock fell slightly by over 3% in early trading, NIO Inc dropped 2.2% to $10.34, and Li Auto Inc fell by 2.4% to $39.72.

In her State of the Union speech, Ursula von der Leyen, the European Commission (EC) president, emphasized the importance of the EV sector for Europe’s economy. However, she expressed concerns about the influx of cheaper Chinese electric cars, which benefit from substantial state subsidies, thereby distorting the market. Von der Leyen drew parallels with China’s solar industry, which negatively impacted European rivals due to unfair trade practices.

UBS analysts recently highlighted the oversupply situation in the European auto market. The rise in production from local original equipment manufacturers (OEMs), Tesla’s upcoming Berlin plant, and Chinese imports are expected to put pressure on major companies like Volkswagen Group and Renault, resulting in a loss of market share and profit margin contraction.

While Europe does provide funding for the automotive sector through research and development (R&D) support, von der Leyen emphasized that the EC does not tolerate significant state subsidies, whether internally or externally. As a result, the EC has launched an investigation into subsidies for Chinese electric vehicles.

The announcement had a positive impact on European automakers, with shares of Renault surging by 5%. Volkswagen, BMW, Stellantis, and Porsche also experienced an increase in stock prices.

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