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Nio shares dip despite 18% Q1 sales forecast rise

(ATF) Chinese electric vehicle (EV) maker Nio reported fourth quarter results that missed profit expectations after the US close on Monday March 1 and its shares dipped over 5% despite a backdrop of a sharp recovery in most US equities and its own forecast of a +18% rise in Q1 sales.

The fall in Nio’s shares comes after appreciation of over 1,000% during 2020, so the downward move after fourth quarter and full year 2020 results were issued was not dramatic. But the increasingly fierce competition for market share in China’s fast growing EV market is putting a focus on any missteps.

Nio emerged as a strong challenger to Tesla in China after it received government funding worth $1 billion last year that saved it from the brink of bankruptcy.

Tesla and Nio also face competition from rivals such as Xpeng, which in January secured a credit line of 12.8 billion yuan from Chinese banks. Li Auto posted its first quarterly profit last week and SAIC-GM-Wuling Automobile – a joint venture with General Motors in China – has been outselling Tesla in recent months.

Nio founder and chief executive William Li hailed continuing progress in announcing the quarterly and full year results.

‘Transformational year’

“Nio concluded a transformational 2020 with a new quarterly delivery record of 17,353 vehicles in the fourth quarter of 2020. The strong momentum has continued in 2021 as we achieved a historic monthly delivery of 7,225 vehicles in January and a resilient delivery of 5,578 vehicles in February, representing strong 352% and 689% year-over-year growth, respectively,” said Li.

“Supported by competitive product offerings, outstanding services and innovative business models, we have won increasing recognition from our users and expect to deliver 20,000 to 20,500 vehicles in the first quarter of 2021.”

The company’s fourth-quarter revenue jumped 133% to 6.64 billion Chinese yuan ($1.03 billion) from a year earlier but some investors focused on the fall in vehicles delivered from January to February – but that could stem from the Lunar New Year holiday and renewed travel restrictions – along with Nio’s greater than expected quarterly profit loss.

Although Nio narrowed its loss from the same quarter the year before, some analysts had expected it to come close to a profit.

China’s booming EV market is expected to grow by more than 50% in 2021, according to a report last week by research firm Canalys. That could help China to outpace Europe in total sales in 2021.

Sales of plug-in passenger cars in Europe in 2020 rose 137% year-on-year to almost 1.4 million in a “disturbed” auto market that was down 20% year-on-year overall, EV-volumes said in January, citing preliminary data. In China, EV sales rose 12% last year to 1.34 million vehicles, according to EV-volumes data.

Nio chief executive Li touted the firm’s new ET7 vehicle as a reason to be optimistic about future sales.

“At our fourth Nio Day on January 9, 2021, we launched the ET7, our first flagship sedan. Boosted by its class-leading dimensions, sophisticated design, superior driving performance and industry-leading AD capabilities, ET7 has received remarkable feedback from users, media and the industry,” Li said.


Jon Macaskill

Jon Macaskill has over 25 years experience covering financial markets from New York and London. He won the State Street press award for 'Best Editorial Comment' in 2016


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