Chinese electric vehicle (EV) maker Nio (NYSE:NIO) just cut its delivery outlook for the first quarter to 30,000 vehicles. That figure is down from between 31,000 and 33,000 vehicles.
In turn, investors have cut the price of NIO stock. Shares are down about 6% as of this writing, with Nio trading hands for around $4.50 per share. The market capitalization currently hovers at roughly $10 billion.
Nio and the EV Glut
Nio has been losing favor with analysts as the EV glut accelerates. Mizuho recently downgraded NIO stock to a “neutral” rating with a price target of $5.50 per share.
For the week ending March 24, Nio sold 3,000 vehicles in China. The company also delivered 8,132 vehicles during February and 10,055 in January. So, the new guidance indicates that March deliveries will likely be around 12,000 units. For comparison, Tesla (NASDAQ:TSLA) sold 13,700 vehicles in China last week.
Nio recently partnered with Geely (OTCMKTS:GELYF) — which owns Polestar (NASDAQ:PSNY) and Volvo (OTCMKTS:VLVLY) — to support “mutual use of their respective charging networks.” The company is gearing up for a European export push built around lower-cost models under the brands Firefly and Alps, as well as battery swap stations. A $2.2 billion investment from Abu Dhabi — which now owns a 20% stake — is fueling the drive. In exchange for the investment, Abu Dhabi is using Nio’s technology for a high-end EV brand called Forseven.
Analysts expect EV prices to dive this year. Chinese production is increasing, lower-priced models are coming on stream and international rivals are fighting to keep up. South Korea’s Hyundai (OTCMKTS:HYMTF) has also been increasing EV production.
In addition to downgrading NIO stock, Mizuho downgraded shares of Tesla and Rivian (NASDAQ:RIVN).
What Happens Next?
The EV market is in survival mode, driven in part by BYD (OTCMKTS:BYDDY) cutting prices and launching cars it can deliver for $25,000 at a profit. Everyone is having to keep up — even EV pioneers like Nio and Tesla.
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.
