On April 19, 2023, Weilai co-founder William Li demonstrated the Weilai EC7 at the Shanghai Auto Show.
Hector Retamar | AFP | Getty Images
BEIJING——Chinese Electric Vehicle Brand Nioh The company said on Monday it would immediately slash the price of the car by $4,200 and end free battery swaps for new buyers.
The move runs counter to Chief Executive Li Bin’s claim in April that Nio would not join a “price war”. tesla Earlier this year, other EV companies in China slashed prices to lure buyers.
The price cuts come after Li said on Friday that the company is delaying its capital expenditures and some research and development projects, according to a FactSet transcript of Nio’s first-quarter earnings call.
The delay is part of an effort to address the cash flow impact of fewer car deliveries, Lee said.
The company reported cash and cash equivalents of 14.76 billion yuan ($2.07 billion) as of March, down from the figures it disclosed for the end of 2021 and 2022.
Analysts at China Merchants Bank International said in a note on Monday that NIO was “too slow in its decision to cut non-core projects”.
“It also now faces a dilemma between brand positioning and profitability, as it has started cutting service benefits, which may weaken its brand image and thus make sales worse than expected.”
Analysts downgraded NIO stock to hold from buy.
Nio also announced Monday that it will No more free battery replacements to new buyers.
deliveries drop
NIO’s deliveries fall to 1.5% in latest monthly data Auto sales in May were 6,155, below the monthly average of more than 10,000 in the first quarter. The monthly average for the fourth quarter was about 13,350.
Looking ahead, NIO stated that its goal for the second half of the year is to deliver at least 20,000 vehicles per month.
Nomura analysts said they expect the automaker to improve its deliveries with new models such as the ES6 SUV and ET5 wagon.
“That said, we expect NIO’s implied upside to be limited by increased competition and limited market share improvement in 2023,” analysts said in a note.
Nomura said it assumed a neutral coverage rating for Nio. Previously, the firm had a buy rating on Nio.
By the end of 2019, Nio’s cash and cash equivalents fell below $1 billion. But the company has staged a comeback in 2020, with investors including state-backed entities providing a lifeline of about $1 billion.
Li said over the weekend that the company has enough cash to support its business.
However, the company reported a sharp drop in gross margin to 1.5% in the first quarter, down from 14.6% a year ago and 3.9% in the fourth quarter.
The Chinese auto market is the largest in the world. Thanks to government subsidies and license plate restrictions, the local electric vehicle industry has grown, and the penetration rate of new energy vehicles has reached about one-third of new passenger cars sold. This category includes hybrid vehicles.
Earlier this month, China’s top executive body, the State Council, said the country would extend purchase incentives for new-energy vehicles as a way to boost consumption, state media reported. It did not provide details.
“Despite short-term headwinds, we believe NIO is still well positioned with multiple upcoming ramps including its lowest cost SUV, the ES6, multi-year EV adoption tailwinds and expansion in China, the largest EV market, EU/global market leadership in high-end EVs in China, and an expanding product portfolio,” analysts at Mizuho Securities said in a note on Friday.
Mizuho maintained its Buy rating on NIO, but cut its price target to $20 a share from $25.
Nio shares are down about 20% so far this year, to $7.73 a share.
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