NIO and Tesla seem to be defying the overall downtrend in the Chinese NEV market with their rising sales in June.

The China Passenger Car Association released the overall auto and NEV (new energy vehicle) sales on July 8. While the total auto sales declined by 6.5% YoY (year-over-year), the NEV sales fell 35% YoY in June. The auto recovery in China, which started on a strong footing amid the pandemic, seems to be derailing again.

Some companies have been defying the downward trend in EV (electric vehicle) sales in China. Tesla (NASDAQ:TSLA), the EV pioneer, recorded 35% month-over-month growth in EV sales in June. Teslas China-made Model 3 grew by 150% month-over-month in May. The company sold 14,954 Model 3s, which brought its market share in Chinas EV market to 23% in June.

After May, Tesla Model 3s impressive sales in June show that government incentives and the introduction of more variants helped the companys sales.

NIO (NYSE:NIO) also recorded increased EV sales in June. The company reported its June delivery numbers on July 2. The EV-maker reported its second consecutive sales record in June. With the sales of 3,740 vehicles, NIO recorded an increase of 179% YoY.

Technode noted that premium EVs, like NIO and Lixiang, sold well across the board. The growth rate for premium autos was 27% YoY. In contrast, lower-priced EVs, like BYD and Geely, recorded fewer sales.

NIO and Tesla are among the EV-makers that have been gaining ground in Chinas EV market. Right now, Chinas EV market is still on shaky ground. The companies are well-known and respected brands in China. Consumers have been drawn to the companies compared to their more affordable counterparts. NIO and Teslas strong position in the worlds largest EV market is also reflected in their stock prices.

While Tesla stock has returned 227% year-to-date, NIO stock has gained 220%. Along with the general rising interest in the EV sector, their strong fundamentals support the stock prices. Recently, momentum trading has pushed NIO and Teslas stock prices. The stocks might see some pullback. However, investors focused on the long term can keep on holding these stocks due to their strong fundamentals and robust growth outlook.

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Are NIO and Tesla Defying the Downtrend in China's NEV Market? - Market Realist