Electric Vehicle Stocks soar: Tesla, NIO, Xpeng Impressive Q2 Sales

On a high note this week, electric vehicle manufacturers experienced significant growth in their share prices, fueled by a combination of strong delivery reports and production data across a multitude of players in the industry. The world leader in EVs, Tesla Inc., alongside several China-based firms, were instrumental in this bullish trend.

The Global X Autonomous and Electric Vehicles exchange-traded fund (DRIV) noted a promising 1.7% intraday spike before pulling back to a 1.1% close. This surge formed part of an encouraging 5.7% increase accumulated across five days of consecutive wins. Remarkably, this ETF substantially outperformed the broader stock market, including both the S&P 500 index and the Nasdaq Composite, which only inched up by 0.1% and 0.2% respectively.

Tesla's stock (TSLA) played a key role in this rally, with an impressive leap of 6.9% to $279.82, marking its highest closing point since September 28, 2022. This marked the culmination of a five-day winning streak during which the stock had risen by 16.1%. Tesla's impressive stock performance followed the company's recent blowout delivery report that indicated a record 466,000 vehicles delivered in the last quarter, outstripping expectations of 449,000.

Rivian Automotive Inc.'s stock (RIVN) also enjoyed robust performance, rocketing up by 17.4%, resulting in its highest closing point since February 17. The stock climbed an impressive 45.4% during a five-day winning streak, further fueling the EV sector's rally. The Irvine, California-based company reported a robust increase in its Q2 deliveries, logging a year-on-year jump of 183%, equating to a delivery of 12,640 vehicles.

Amazon.com Inc. (AMZN), Rivian's most significant shareholder, saw a minor slip of 0.1% in its shares, but Ford Motor Co. (F), another substantial shareholder in Rivian, experienced an encouraging advance of 0.7%.

In the meantime, the EV sector’s rally was not without its outliers. Mullen Automotive Inc.'s stock (MULN) went against the grain, dipping by 6.3%, even after the company reported that it recorded revenue for the first time and was in the "best financial position" in its history.

Despite a momentary downgrade at Citi Research, Lucid Group Inc. (LCID) shares surged 7.3% higher to record its sixth consecutive gain. Citi Research’s Itay Michaeli stated that while Lucid’s technology holds a competitive advantage over its peers, there is some uncertainty regarding the near-term demand for the Lucid Air EV and the company’s gross margin performance. Nevertheless, the stock managed to rally, fueled by positive delivery and production data from numerous other EV makers, including Tesla, Nio, and Rivian.

Turning to Chinese EV makers, firms such as Nio Inc., Xpeng Inc., and Li Auto Inc. experienced promising advancements. For instance, Shanghai-based Nio reported that June deliveries had surged by 74% compared to May. Furthermore, the U.S.-listed shares of Xpeng Inc. advanced by 4.2%, with Li Auto Inc. experiencing a 3.4% hike. This rising trend was also witnessed in the stocks of Boyd Co. Ltd., which rose by 3.1%.

The encouraging growth of EV sales in Asia reflected the increased competition in the market, stemming from a price war earlier this year, with Tesla's price cuts triggering similar actions by both EV and traditional vehicle manufacturers seeking to capture Chinese market share. A significant boost to the EV sector was Beijing

's unwavering commitment to sustainability goals. The Chinese government has laid out a vision to see New Energy Vehicles (NEVs), including EVs, plug-in hybrids, and hydrogen fuel-cell vehicles, account for 20% of total new car sales by 2025, up from around 5% currently. In addition, China has pledged to become carbon-neutral by 2060, a target that implies a massive transition to electric transport over the next few decades.

This political support, coupled with the increasing competitiveness of the EV sector, is making electric cars more and more affordable to the Chinese middle class. This trend is likely to continue, accelerating the penetration of EVs in the world's largest auto market.

Notably, Contemporary Amperex Technology Co., Limited (CATL), China's leading automotive lithium-ion battery maker, which supplies Tesla and other EV manufacturers, witnessed a stock increase of 2.6%. The rise was attributable to the ongoing EV rally and the growing demand for electric vehicle batteries.

Internationally, major automakers like General Motors (GM) and Volkswagen (VWAGY) are also joining the electric revolution, committing billions of dollars to electrify their fleets and build battery plants. This week, General Motors' shares rose by 1.1% following an announcement that the company is increasing its EV and autonomous vehicle budget to $35 billion through 2025. On the other hand, shares of Volkswagen AG, which plans to become the global EV leader by 2025, increased by 1.4%.

In summary, the electrification trend in the auto sector is driving significant growth for EV manufacturers, battery makers, and related industries. A combination of strong delivery reports, production data, and political support for clean energy, both in the US and China, is fueling the bullish sentiment. Despite some short-term volatility, the long-term outlook for the sector remains positive as the world transitions to a more sustainable future.