Beleaguered Chinese electric vehicle (EV) manufacturer Nio (NYSE:NIO) has finally given investors something to cheer about. Earlier today, management announced a large increase in April deliveries compared to the prior year. This news is helping lift many other EV stocks alongside Nio. However, NIO stock still faces broader challenges.
According to a press release, Nio delivered 15,620 vehicles in April 2024, representing a 134.6% year-over-year (YOY) increase. The tally consisted of 8,817 premium smart electric-powered SUVs and 6,803 premium EV sedans. Nio has also delivered 45,673 vehicles so far this year, representing a more than 21% year-over-year (YOY) increase. Finally, Nio’s cumulative deliveries amounted to 495,267 as of April 30.
Notably, on April 25, the EV manufacturer launched the ET7 as well. The company bills this EV as a “premium smart electric executive sedan.” Loaded with significant improvements in interior and exterior design, the ET7 is “tailored to cater to the demands of premium executive users.”
NIO Stock in Context
In addition to Nio, Chinese EV manufacturers Li Auto (NASDAQ:LI), XPeng (NYSE:XPEV) and BYD (OTCMKTS:BYDDY) also released April deliveries today. Among these companies, Li was the unfortunate standout, reporting lower sales. LI stock has been choppy throughout much of today’s session.
Meanwhile, XPEV stock saw a modest lift earlier today, although shares are now trading roughly at parity. BYD is seeing a decent rise in sentiment as well, likely due to the implications impacting its battery business. Should EV companies perform better than expected, BYD could be a long-term winner.
Still, the enthusiasm for NIO stock today must be taken with a broader context in mind. While the delivery numbers are encouraging, the acceleration of demand has slowed. Experts believe that China’s “new-energy cars” may grow 22% this year. That sounds robust, but sales of these vehicles grew 36% in 2023. What’s more, in 2022, that growth rate stood at 90%.
The Price War Gets Ugly
Of course, one of the biggest headwinds impacting NIO stock right now — and the entire EV ecosystem — is the EV sector price war. Started by Tesla (NASDAQ:TSLA), the company’s price cuts were aimed at boosting sales while simultaneously disrupting the competition. However, the result so far has been a downcast environment for most participants.
Indeed, the decision has turned out to be a double-edged sword. On one hand, Tesla commands incredible brand power, so it’s in a position to launch a price war. But on the other hand, TSLA stock is down roughly 27% year-to-date (YTD). It’s also slipping conspicuously on Wednesday.
Moving forward, the bigger issue for Nio and other non-Tesla EV companies will be staying financially solvent. Slashed prices and denied access to after-sale services have angered customers. If this dynamic continues, it could cloud the entire industry.
On the date of publication, Josh Enomoto 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.
