This Surprise Electric Vehicle Stock Is Outperforming Tesla And NIO In 2021

Businessman, Internet, Continents

The lesser-known Chinese electric mobility scooter manufacturer Niu Technologies (NIU) has been surging lately despite a sharp pullback in the EV stocks owing to a semiconductor chip shortage and asset bubble concerns. Will NIU be able to capitalize on this market slump to increase its market share, or is the stock also due for a trend reversal? 

Chinese electric vehicle (EV) manufacturer NIU Technologies (NIU - Get Rating) has been making headway in the red-hot industry’s dominant players witness a sharp pullback amid a global semiconductor shortage.

Shares of NIU have surged 34.3% year-to-date, while shares of industry giants like Tesla, Inc. (TSLA - Get Rating) and Nio Limited (NIO - Get Rating) have declined over this period. While the decline in TSLA stock can be attributed to its premium valuation despite low profit margin, NIO shares plunged as the company reduced its delivery guidance for the first quarter of 2021 and temporarily halted production amid the global semiconductor shortage.

NIU’s ability to retain its momentum has made it one of the most promising EV stocks in the market. Specializing in smart electric scooters, NIU’s compact products have been a big hit in the world’s most populous country. However, a global semiconductor shortage is expected to hit NIU soon because the company is heavily dependent on processing chips required in electric mobility scooters. Furthermore, the stock’s skyrocketing valuation might make investors exit their position amid investors’  rotation away from overvalued companies.

Here’s what we think could shape NIU’s performance in the near term:

Current Condition of Chinese EV Industry

China has retained its title as the largest EV market in the world and is projected to sell 3.7 million vehicles this year, according to a Statista report. However, Europe dethroned the Eastern giant to become the fastest growing EV market in 2020, with sales rising 137% year-over-year.

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