Reasons Why Nio Played Another Drop Today

Nio

Brief Summary

  1. In August, Nio (NYSE:NIO) sent out around 400 of its latest SUV model.
  2. Later this month, the ET5 midsize car delivery will begin as the company’s following new product.
  3. Consumer demand remains under pressure in China as lockdowns persist.

NYSE:NIO

The American depositary shares of Chinese EV manufacturer dropped by more than 5% on Thursday and another almost 6% today before recovering some of those losses. The stock was down 4% as of 11:45 a.m. ET.

What’s the Reason?

Nio announced August EV sales numbers, likely contributing to yesterday’s decline. Although yearly deliveries increased by 81%, that was from a low base due to problems in the supply chain that halted manufacturing in August of 2021. While this may be the case, the automobile manufacturer has increased revenues by 28.3 percent this year compared to the same time last year.

For example, the new ES7 mid-large SUV, which has recently started ramping up production, has been a boon. In August, the company sent out about 400 of their latest SUV. However, several obstacles still need to be overcome, such as COVID-19 regulations that harm supply and demand and persistent supply chain bottlenecks.

What’s Next?

The new limits imposed by the United States government on the export of semiconductor chips to China are also causing a stir among investors. CNBC claims that the ban will not immediately affect Nio or any other Chinese EV manufacturer. The new regulation does not include chips used by the company and others in ADAS systems.

However, the fact that some electric vehicle manufacturers rely on American processors does not indicate that this cannot alter. The COVID-19 lockdowns also keep appearing in new places across China. Lockdowns reduce customer demand even if supply chain problems don’t affect output directly. In investors’ opinion, the current market conditions are not favorable for Chinese manufacturers like Nio.

Featured Image – Megapixl © Michaelvi

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About the author: I'm a financial journalist with more than 1.5 years of experience. I worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan. I love to write about marketing and finance. Other than that, I like spending time in the gym and playing PC games.