Chinese EV makers face another headwind as Beijing warns on protecting key tech

Chinese electric vehicle stocks fell on Thursday after the government in Beijing issued a recommendation that automakers make sure advanced electric vehicle technology stays in the nation. Sources told Bloomberg that the government is encouraging Chinese automakers to export so-called knock-down kits to their foreign plants, which means that all the key parts would be produced domestically before being sent for final assembly.

NIO (NYSE:NIO) was down 7.4% in Thursday morning trading, Li Auto (NASDAQ:LI) peeled off 4.2%, XPeng (NYSE:XPEV) fell 6.8%, and ZEEKR Intelligent Technology (ZK) showed a drop of 1.8%. Earlier in the day BYD Company (OTCPK:BYDDF) and Great Wall Motor (OTCPK:GWLLF) both fell 1% in Hong Kong trading. NIO (NIO), XPeng (XPEV), and Li Auto (LI) are all down more than 40% on a year-to-date basis.

The declines also coincided with a broad weakness in the Chinese stock market. Notably, the CSI 300 Index, which tracks the top 300 stocks traded on the Shanghai and Shenzhen stock exchanges, fell 0.5% on Thursday and is down 5% over the last six weeks.