Shares of Nio (NYSE:NIO) are trending downward today after the Chinese electric vehicle maker reported that its January deliveries fell 12% from a year earlier. The disappointing delivery numbers from Nio are the latest sign demand for electric vehicles (EVs) is slowing, particularly in China, the world’s biggest car market.
In recent weeks companies ranging from Tesla (NASDAQ:TSLA) to Ford (NYSE:F) have slashed the prices of their EV in an effort to spur demand, leading some analysts to speculate about an impending price war.
Prior to today, NIO stock had declined 51% over the last 12 months to trade at $12.07 per share.
What Happened With NIO Stock
Nio reported that it delivered 8,506 electric vehicles in January this year, a drop of about 12% from the first month of 2022. The Shanghai-based company said its cumulative deliveries through the end of January totaled just under 300,000 EVs.
Other domestic Chinese EV manufacturers also delivered soft delivery figures for January, raising fears that demand for electric vehicles is slowing sharply in China, which is the world’s biggest consumer market with 1.4 billion people.
Why It Matters
Waning demand for electric vehicles has led major automotive companies such as Tesla and Ford to cut the prices on their marquee products in recent weeks. Ford just announced it is cutting the price of its Mustang Mach-E electric muscle car by an average of $4,500 across all model editions.
Before Ford’s move, Tesla had slashed the prices on most of its EV models in jurisdictions around the world in an effort to spark demand among consumers who are struggling with inflation and rising interest rates. Tesla cut prices on its Model 3 and Model Y EVs by as much as 20%.
The discounts have led some industry analysts to speculate that we could be entering an old fashioned price war among automakers as they try to keep sales of their electric vehicles aloft. The weak delivery numbers from Nio could lead to price cuts among China’s domestic automakers.
What’s Next for NIO Stock
NIO stock is down about 1% today on its sluggish January delivery figures. While a price war among vehicle manufacturers would be good news for consumers, it would not be good for the companies’ profits or their shareholders. We’ll have to wait and see how this situation plays out further in the coming weeks and months.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.