NIO stock is up 11% today after the so-called “Tesla of China” reported a 35% increase in vehicle deliveries for the three months ended September 30.
A Welcome Reprieve for NIO Stock
Chinese electric carmaker NIO Inc (NYSE:NIO) had been battling for survival last month following the release of its Q2 results, which saw the company report a greater than expected loss of $462 million USD, an 80% increase on the same period last year and considerably worse than the predicted figure of $390 million USD. NIO has been hemorrhaging money since its foundation in 2014 and had to contend with declining electric car sales in recent quarters. However, today’s announcement that deliveries have increased in subsequent months is a welcome reprieve for NIO stock.
NIO is reporting that it delivered 4,799 vehicles in the third quarter, with over 2,000 of those deliveries rolling out in September alone. “September deliveries, in particular, were positively impacted by expedited shipments ahead of China’s national day holiday,” said William Li, founder and CEO of NIO, in a press release. “In addition to the solid sequential improvement in our delivery numbers, we have seen accelerated growth of our order backlog since September supported by a more expansive sales network.”
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NIO stock plunged 60% in just two weeks in Septemeber, with its disappointing earnings forcing the company to cut its headcount by 20%. Li stated that these measures are meant to enhance and streamline the company’s operations in the sales and services network as well as R&D operations. Declining electric vehicle sales in China were further hampered by the Chinese government’s decision to cut subsidies, which meant NIO sold just 847 vehicles in July.
Is the Worst Yet to Come?
While an increase in vehicle deliveries is clearly welcome news for NIO stock, the company is definitely not out of the woods yet. Tesla (NASDAQ:TSLA), its biggest competitor, will begin manufacturing in China before the end of the year, which will allow Elon Musk’s company to sell vehicles to Chinese consumers at a reduced price. If Tesla undercuts NIO’s price of $68,000 USD for its flagship vehicle, the ES8, then the worst could be yet to come to the Shanghai-based carmaker.
Featured Image: DepositPhotos © miflippo
