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Why Is NIO Stock Heating Up Today?


  • Nio (NIO) delivered 10,707 vehicles in June, down by 17% year-over-year.
  • For the three months ended June 30, Nio’s deliveries totaled 23,520 vehicles, down by 6% YOY.
  • NIO stock is up by about 5% this year.
NIO stock - Why Is NIO Stock Heating Up Today?

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Nio (NYSE:NIO) stock is in the green today, bringing its five-day gain to about 8%. The Chinese electric vehicle (EV) company previously announced that it had delivered 10,707 vehicles in June, down by about 17% year-over-year (YOY) compared to 12,961 deliveries. Specifically, June 2023 deliveries consisted of 6,383 premium smart electric SUVs and 4,324 premium smart electric sedans. In the three months ended June 30, Nio delivered a total of 23,520 vehicles, down by 6% YOY compared to 25,059 vehicles.

Nio stated that it launched and began deliveries of the ET5 Touring on June 15. On June 28, the company began ramping up the delivery of its ES8 SUV.

Why Is NIO Stock Heating Up Today?

This morning, Reuters released a Chinese EV report from consultancy firm AlixPartners. The report estimates that Chinese automotive companies are on track to account for over 50% of cars sold in China this year for the first time ever. This represents a major victory for companies like Nio, as China boasts the largest automotive market in the world.

Over the past 40 years, companies like Volkswagen (OTCMKTS:VWAGY) and Toyota (NYSE:TM) have controlled China’s automotive market, although their grip seems to be gradually loosening. However, the introduction of high-tech vehicles and electric innovations has changed the market dramatically.

“It would be the best for foreign brands to learn from new Chinese EV startups if they want to survive in China or face the disruptive impact from those brands in their home markets,” said AlixPartners’ Stephen Dyer.

China’s NEVs and Subsidies

From 2016 to 2022, new energy vehicles (NEV), which includes EVs and plug-in hybrids, have received $57 billion in subsidies from the Chinese government, according to AlixPartners. For comparison, the U.S. government has only provided $12 billion of subsidies within the same time period. The firm also estimates that Chinese automotive sales will grow 3% to 24.9 million vehicles this year. By 2030, sales are estimated to grow to 30.6 million vehicles, with over half of them being EVs.

In 2030, Dyer predicts that annual sales of Chinese-branded cars will total 9 million. That would equate to a 30% Chinese brand global market share and a 15% market share in Europe. At the same time, competition is also primed to eliminate the NEV under-performers. Out of 167 NEV brands, Dyer expects only 25 to 30 of them to survive in the long term.

On the date of publication, Eddie Pan 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. 

Article printed from InvestorPlace Media, https://investorplace.com/2023/07/why-is-nio-stock-heating-up-today-2/.

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