Automobile stocks revved higher on Thursday after indications from China were that measures to stoke demand for both new and used cars will be put in place and EV subsidies/tax breaks will be extended.
The biggest gainers in the electric vehicle sector in early trading on Thursday were Faraday Future Intelligent Electric (NASDAQ:FFIE) +33.59%, Nio (NIO) +10.03%, Ouster (OUST) +7.99%, XPeng (XPEV) +7.95%, Electrameccanica Vehicles (SOLO) +7.35%, ChargePoint Holdings (CHPT) +7.31%, TuSimple (TSP) +7.23% and Canoo (GOEV) +6.31%.
Tesla (TSLA) was also solidly higher with a 3.97% gain.
Detroit majors General Motors (GM) +2.73% and Ford Motor Company (F) +3.39% were also higher and outperforming the broad market.
The boost in confidence in the auto sector includes many supplier stocks after Jefferies made the case that a recovery may be setting up.
“The risk/reward for auto suppliers do not look great heading into second-quarter earnings, but many companies are expected to reiterate their guidance for the year,” noted RBC analyst Joseph Spak. He also said a key catalyst for suppliers could be the updates on production in the July/August/September time frame, which could be extrapolated to have more confidence in stronger 2023 production.
Auto supplier stocks on the move included Tenneco (TEN) +10.98%, Visteon (VC) +6.97%, and Goodyear Tire & Rubber (GT) +4.55%.
Read more about Beijing’s support for the auto industry.