What happened
Actions of the manufacturer of electric vehicles. NIO (NYSE: NIO) and other Chinese stocks moved lower on Wednesday, fearing investors of an outbreak of international tensions after the US government ordered the closure of the Chinese consulate in Houston.
As of 11:30 a.m. EDT, the shares of NIO’s US depositaries fell 4.6% from Tuesday’s closing price.
And that
Investors in Chinese companies reacted with concern after the US State Department abruptly ordered the Chinese government to close its consulate in Houston. The State Department ordered the shutdown in response to “massive illegal espionage and influence operations across the United States against US government officials and US citizens,” it said in a statement after the Chinese government released the order.
The latest NIO model is the EC6 sports car, which started shipping in February. Image source: NIO.
For American investors in NIO, rising tensions between the US and China naturally raise concerns. But it’s important to note that the U.S. election year dispute with China is unlikely to curb NIO’s growth plans, at least in the short term.
NIO has raised the possibility of exporting its vehicles to markets such as the United States, eventually. But right now, it is currently fully focused on expanding its sales in China, where it has invested heavily in the company’s network of stores and service centers. That is likely to remain true even if China and the U.S. continue to argue for the rest of 2020.
Now what
Automotive investors have reason to expect NIO’s second-quarter earnings report to be good, given the company’s better-than-expected second-quarter sales and continued cost-cutting efforts. The company has not yet announced a date for that report, but it is likely to happen sometime next month.
