Why Chinese EV stocks are crashing

Core Insights - Two prominent Chinese electric vehicle (EV) makers, Nio and Li Auto, experienced significant stock market drops on March 3 after strong rallies in late February, with Nio's stock falling 4.32% and Li Auto's stock dropping 9.73% [1][2] Delivery Reports - Li Auto reported February deliveries of 26,263 vehicles, reflecting a 29.7% increase compared to the same month in 2024 [3] - Nio delivered 13,192 vehicles in February 2025, marking a 62.2% year-over-year growth, despite being lower than Li Auto's figures [3] Market Reaction - The stock market's reaction appears to be an overreaction to the delivery reports issued by both companies at the beginning of March [2][4] - The phenomenon of earnings or delivery filings triggering significant volatility is increasingly common, as evidenced by Nvidia's strong earnings report followed by a sell-off [4] Additional Factors - Nio's delivery of only 12 cars in the Netherlands in February drew negative attention, similar to Tesla's single sale in South Korea in January 2025 [5] - Reports of self-driving software issues in China, including with Li Auto's L7 model, may have contributed to the negative sentiment [5][6]