Chinese electric vehicle (EV) maker Nio (NYSE:NIO) is raising alarms about its lack of access to the U.S. car market.
CEO William Li told the Financial Times it is unfair that Tesla (NASDAQ:TSLA) gets unfettered access to the Chinese market while Chinese companies face tariffs and regulations.
Nio stock was due to open July 13 at $11.13 per share, representing a market capitalization of $18.8 billion on 2022 sales of about $7 billion. Shares are up 15% in 2023 but were down 10% less than a month ago.
Nio Stock: Barriers to Entry
Li’s complaints include tariffs imposed on Chinese imports under former President Donald Trump’s administration and President Joe Biden’s administration’s efforts to subsidize American-made EVs. Tesla has its largest factory in Shanghai and delivered 74,212 cars to the Chinese market in June. Nio has no plans to launch a U.S. factory.
To move its cars, Tesla launched a price war in the Chinese market at the start of this year. An effort to end the price war ended recently when Tesla violated an agreement with other car makers.
Nio is one of four Chinese-owned EV stocks traded in New York. The others are Xpeng (NASDAQ:XPEV), Li Auto (NASDAQ:LI) and Polestar (NASDAQ:PSNY), which is controlled by Geely (OTCMKTS:GELYF). Xpeng and Li are not yet exporting cars in quantity. Polestar has plans to assemble its Polestar 3 in South Carolina, making it eligible for subsidies.
Of the four, however, Nio requires the most preparation before entering a new market. That’s because its pitch is based on its quick battery swap technology, and swap stations must scale alongside sales. Nio entered the European market last year, but it is trapped in a cycle of low sales and profits.
Nio delivered 23,520 cars during the second quarter. It has just begun making two new models, the ET5 touring car and ET8 SUV. Nio plans to sharply accelerate production in the current quarter.
What Happens Next?
Nio just got a $738 million investment from a group affiliated with Abu Dhabi’s government. Nio is in trouble and wants to make trouble for Tesla in response.
As of this writing, Dana Blankenhorn did not hold (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.
