NIO stock is in the red this week after the China Association of Automobile Manufacturers (CAAM) published new data that indicated a year-over-year decline in sales of electric vehicles (EV).
Slumping Sales Sink NIO Stock
NIO Inc (NYSE:NIO), a major Chinese manufacturer of electric vehicles, has been enduring a difficult time as of late as it contends with weak sales, a lack of funding from the Chinese government for its new facility, and increased pressure in the Chinese market from major rival Tesla (NASDAQ:TSLA). NIO stock has now been dealt a further blow after the CAAM said the sale of new energy vehicles fell over 45% to 75,000 in October, marking the fourth consecutive quarter of declining sales.
October was a considerably poorer month for sales than September, which also saw a decline of 34% to 59,000. Production also declined in October, over 35% to 95,000. One possible positive for the industry was the year-to-date sales figure of 947,000, which is an increase of 10.1% compared to the first ten months of 2018. However, recent declines are a major worry for investors, who appear to be flocking from NIO stock in their droves.
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The CAAM said that the declining sales in recent months should contribute to a year-over-year drop, despite a strong start to the year. “There is a gap between sales to date and where they were last year, so according to the development trend, we may see negative growth for new energy vehicles this year,” said Chen Shihua, assistant secretary-general at CAAM.
Recent Gains Dashed
NIO stock actually made its biggest intraday gains in months last week after the EV maker reported a 25% jump in deliveries in October. However, these gains appear unsustainable based on the CAAM forecast and the rate at which the company is burning through its cash reserves. NIO is currently burdened with debts of $1.56 million USD, and it doesn’t look like that position will be in any way alleviated by a sudden spike in sales.
NIO shares are currently trading for $1.88 in New York.
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