Chinese EV maker Nio is up 240% this year
On the brink of bankruptcy, one of China’s largest electric vehicle manufacturers pushes its plans to expand its operations in Europe and beyond.
Nio has been listed on US exchanges for two years and is a competitor to Tesla. Shares in the Chinese startup are down more than 80% from last year’s highs due to mounting financial problems. Following the public offering on the New York Stock Exchange, several executives, including one of the founders and CEOs of Nio in the United Kingdom and the United States, have resigned. In addition, the company was forced to lay off staff.
Then, in the midst of the coronavirus outbreak, Nio announced funding talks with the government of Hefei City in southeast China. As a result, the company received 7 billion yuan ($ 1 billion) from investors, including those supported by the state. Meanwhile, according to Nio, vehicle shipments reached a record 3,740 units in June and 10,000 in the second quarter as a whole. The company’s shares are up more than 240% this year..
«We hope that in the second half of next year we will be able to make preliminary attempts in some countries that welcome the development of the electric vehicle sector», – told reporters on Thursday William Li, founder and chairman of the board of directors of Nio.
«We hope to start in Europe», – said Lee. He declined to name specific countries, but said Nio’s plans to enter major global markets by 2023 and 2024 are already under way..
According to Lee, the American office still employs about 200 people, up from 600 at its peak..
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Nio still has a long way to go in realizing its global ambitions if it wants to match Tesla’s scale Ilona Mask.
In the second quarter alone, Tesla delivered over 90,000 vehicles worldwide. Almost a quarter of revenue in the three months ended June 30 came from China – $ 1.4 billion, and about half – from the United States – $ 3.09 billion.
Musk is also watching Europe. After expanding operations in China with a new factory in Shanghai, Tesla’s second giant factory outside the US will open in Berlin.
Tesla shares are up more than 378% this year to surpass $ 2,000 a share on Thursday ahead of a record share split "five to one" for shareholders on August 21.
Nio shares on Thursday closed down about 2% at $ 13.78 per share.
The economic shock caused by the coronavirus pandemic has hit the Chinese auto market, which is grappling with a multi-month slump in sales. According to the Ministry of Industry and Information Technology, car sales in the first seven months of the year fell 12.7% from a year ago, while new energy car sales fell 32.8%..
Sales of new energy vehicles, including pure electric and hybrid vehicles, increased by 19.3% for the first time in a year, the ministry said..
China is the largest automotive market in the world. Beijing has a national ambition to become the world leader in new energy vehicles, while the automotive industry as a whole plays a significant role in the country’s economy. Shortly after the country’s coronavirus outbreak subsided, Chinese authorities announced a new policy to support the auto and e-mobility industry..
Some of the startups that have survived the initial flow of EV development are also looking for capital markets in the US. Li Auto registered on the Nasdaq a few weeks ago, and Alibaba-backed Xpeng also filed for an initial public offering on the New York Stock Exchange earlier this month..
The Chinese government now also allows companies to sell electric vehicles without a battery, giving Nio the opportunity to launch a product «battery as a service». According to Lee, the subscription plan lowers the initial cost of the car, and it can be compared to the usual payment for gas..
Customers who purchase a battery plan that costs at least 980 RMB ($ 140) per month can enjoy a 70,000 RMB ($ 10,000) discount when purchasing a Nio car. The company announced last month that its latest model, the EC6, will ship in September with a starting price of RMB 368,000 ($ 52,571)..
To support the new battery product, Nio founded a new battery company in Wuhan, China. The other three investors are leading battery developer Contemporary Amperex Technology (CATL), Hubei Science Technology Investment and financial services company Guotai Junan International. Each company will invest 200 million RMB, they will own 25% of the shares.
Nio’s Li believes the battery maintenance plan should give gas-powered drivers more incentive to switch to electric vehicles. Li said even without a new battery, demand for Nio cars has already surged in August.
The company, which reported a net loss of over 1.17 billion yuan ($ 166.5 million) in the second quarter, forecast in its latest income statement last week to ship between 11,000 and 11,500 vehicles in the third quarter..
Nio also hopes its new battery will help strengthen the company’s position in the industry..
«Our (competitive) benchmark is Benz, Audi, BMW and Tesla, ”Lee said. – If they want to use (battery maintenance) then no problems because they can afford it. So the only question is if they want to use it.».