Nio cuts prices for its cars — and delays business expansion plans

BEIJING — Chinese electrical car marque Nio said Monday it is cutting prices for its cars by the equivalent of $4,200 effectual immediately, and ending escaped artillery swaps for caller buyers.

The determination is contrary to CEO William Li's assertion successful April that Nio would not articulation a "price war." Tesla and different electrical car companies successful China had chopped prices earlier this twelvemonth successful a bid to pull buyers.

The terms cuts besides travel Li's comments Friday that the institution was delaying its superior expenditure and immoderate probe and improvement projects, according to a FactSet transcript of Nio's first-quarter net call.

Li said the hold is portion of an effort to code the interaction connected currency travel from less car deliveries.

The institution reported currency and currency equivalents of 14.76 cardinal yuan ($2.07 billion) arsenic of March, beneath what it disclosed for the extremity of 2021 and 2022.

Nio's determination to "cut non-core projects is excessively slow," analysts astatine China Merchants Bank International said successful a enactment Monday.

"It present besides faces a dilemma betwixt marque positioning and profitability, arsenic it has started to chopped work benefits, which could dent its marque representation and frankincense income much severely than expected."

The analysts chopped their standing connected Nio shares to hold, from buy.

Nio connected Monday besides announced it would no longer connection artillery swap services for free to caller buyers.

The latest monthly figures amusement Nio's deliveries fell to 6,155 cars successful May, down from the first-quarter mean of conscionable implicit 10,000 vehicles a month. The monthly mean successful the 4th fourth was astir 13,350 cars.

Looking ahead, Nio said that it aimed to present astatine slightest 20,000 cars a period successful the 2nd fractional of the year.

Nomura analysts said they expected the car institution tin amended its deliveries with caller models, similar the ES6 SUV and ET5 touring sedan.

"That said, we expect NIO's implied upside to beryllium capped by intensified contention and constricted marketplace stock betterment successful 2023F," the analysts said successful a report.

Nomura said it was assuming sum of Nio with a neutral rating. Previously, the institution had rated Nio astatine buy.

Nio's currency and currency equivalents fell beneath $1 cardinal astatine the extremity of 2019. But the institution made a comeback successful 2020 with a lifeline of astir $1 cardinal from investors, including state-backed entities.

Li said implicit the play the institution had capable currency to enactment its business.

However, the institution reported a crisp driblet successful gross borderline to 1.5% successful the archetypal quarter, down from 14.6% a twelvemonth agone and 3.9% successful the 4th quarter.

The Chinese car marketplace is the largest successful the world. Thanks to authorities subsidies and licence sheet restrictions, the section electrical car manufacture has grown and penetration of caller vigor vehicles has reached astir one-third of caller rider cars sold. The class includes hybrid-powered cars.

Earlier this month, China's apical enforcement body, the State Council, said the state would widen acquisition incentives for caller vigor vehicles arsenic a mode to boost consumption, according to authorities media. It did not supply details.

"Despite short-term headwinds, we judge NIO remains well-positioned with aggregate upcoming ramps including its lowest outgo SUV ES6, a multi-year EV adoption tailwind and marketplace enactment successful premium EVs successful China, the largest EV market, EU/Global expansion, and an expanding merchandise portfolio," analysts astatine Mizuho Securities said successful a enactment Friday.

Mizuho maintained its bargain standing connected Nio, but lowered its terms people from $25 to $20 a share.

Nio shares are down by astir 20% for the twelvemonth truthful acold astatine $7.73 a share.

Nio vs Tesla stock performance