Tesla (TSLA -2.85%) has invested a lot of time and effort into expanding production capacity at its factory in Shanghai, China. There are signs these efforts are paying off, but the stock has taken a hit after a major unrelated recall from EV leaders on Thursday. Tesla shares fell more than 4% in morning trading, ET midday. It is still down 3.1% as of .
On the other hand, the market share of Chinese EV manufacturers is Nio (Nio -0.52%) When lee auto (Lee 7.21%) It went in the opposite direction, following signs that demand for EVs in China is still strong. Nio was up almost 5% and Li Auto was up his 10%, their respective highs for the day. As of noon EST, Li was still up 7.3%, but Nio abandoned that gain.
Tesla is recalling 1.1 million electric vehicles over concerns about how its fully automatic windows react when they detect an obstacle while closing. The main concern is that closing the window “could apply more force” than was supposed before it automatically retracted, potentially pinching a driver or rider. includes Model 3 manufactured after 2017, as well as several years of Model Y, Model S, and Model X. wall street journal.
The news appears to have hit the stock on a day that otherwise news from China might have boosted it. company costs should be minimal. The automaker also said it was not aware of any accidents or injuries related to the issue.
News from Li Auto pushed Chinese EV makers higher on Thursday. The company, the maker of battery electric vehicles powered by small petrol engines as “range extenders”, has made a surprise announcement that it will launch its new L8 SUV at the end of September ahead of schedule.
Yanan Shen, co-founder and president of Li Auto, said the early launch was “based on the overwhelming market reaction in anticipation of its launch.” This is good news, as demand in China has been inconsistent since the spring when a series of COVID-19 lockdowns in major Chinese cities began impacting both production and consumer demand across the industry.
Tesla used some of these delays to implement a planned capacity increase at its Shanghai factory. The facility now has the capacity to produce approximately 1.1 million vehicles per year.
Nio is also increasing capacity and launching new models. The company expects to begin deliveries of his midsize ET5 sedan later this month, and expectations are high. Investors seem to see high demand for Li Auto’s new SUV as a good sign for Nio as well.
Tesla’s recall announcement may have dampened investors’ enthusiasm for the stock, and Lee’s news may have boosted their views on Nio’s prospects. Still, a predictable recovery in China’s EV market should be good news for all three.
Howard Smith holds a position at Nio Inc. The Motley Fool has positions with and endorses Nio Inc. and Tesla. The Motley Fool’s U.S. headquarters has a disclosure policy.