Shares of Chinese electric vehicle (EV) maker Nio (NYSE:NIO) are falling today. The drop in NIO stock comes as investors begin to doubt the firm’s plans to start selling cars in the U.S. in 2025.
NIO stock is trading at around $7.70 per share and a market capitalization of $13.7 billion on Nov. 9 after Reuters reported that Nio is still debating the U.S.-entry question. Ganesh Iyer, CEO for Nio USA, said the company is considering “any kind of partnerships” to bring its “immersive user experience” to the U.S. market and North America.
NIO Stock: Not Just Any Chinese EV
As I have been reporting for years, Nio needs infrastructure to expand globally. In China, it offers sumptuous “Nio Houses” and battery-swap stations, which can maintain a car’s range and swap batteries in just a few minutes. The company has already said it’s looking to build a dealer network in Europe, as it prepares to launch a new model called the Firefly.
In many ways, Nio was originally sold as a lifestyle brand in China, but that market collapsed with President Xi Jinping’s tech crackdown. Nio needed a government-directed bailout to get through the pandemic.
Now, Nio is the weakest of the Chinese EV stocks trading in New York. The company recently had to fire 10% of its staff. NIO stock is down by more than half from its August high. Nio is also diversifying its supply chain and buying factory assets from state-backed JAC Motors.
Nio’s big plans could shake up the U.S. car industry, which now focuses on selling cars and aftermarket service. In Europe, Nio has focused on a leasing strategy, with ongoing costs and a different kind of cash flow. But Nio executives have also complained about market access. The disdain for China shown by Republican presidential candidates in their recent debate could also be a bearish sign.
What Happens Next?
Nio is losing money on every car it sells and it’s clearly trying to save every cent that it can. The company is expected to report its third-quarter results today, Nov. 9. If its losses widen, NIO stock could spiral downward.
On the date of publication, 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.
