'Tesla of China' warns coronavirus to snarl business
Nio is fighting for its survival
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Nio, often referred to as the “Tesla of China,” says the timing of the Lunar New Year and the coronavirus outbreak are responsible for its drop in deliveries in January and warned of further disruptions in February. Shares fell in response to the news.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NIO | NIO INC. | 4.43 | -0.18 | -3.90% |
The electric-vehicle maker said Monday that it delivered 1,598 vehicles in January, down 11.5 percent year-over-year. The deliveries consisted of 1,493 ES6s, the company’s five-seat SUV, and 105 ES8s, the company’s seven-seat SUV.
“We achieved satisfactory results in January despite the outbreak of novel coronavirus,” Nio CEO William Li said in a statement.
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However, CFO Steven Fung warned the impact of the outbreak will spill over into February, likely putting the company’s fourth-quarter delivery forecast of 8,000 vehicles at risk.
“Looking ahead to February, we expect a reduction in vehicle production and deliveries, compared to the months of peak sales last year, as the Chinese government postponed the return to work from Chinese New Year holiday for most businesses across the country in an effort to fight the outbreak,” Fung said.
The production and delivery freeze comes at an inopportune time for Nio, which is in the midst of a fight for its survival amid increased competition from Tesla and declining car sales in China.
Earlier this year Tesla’s first China-made vehicles rolled off the assembly line of its Shanghai plant, which is expected to produce 250,000 vehicles annually.
The increased competition from Tesla and others comes as sales of new electric vehicles in China, the world’s largest auto market, declined 4 percent year over year in 2019, after subsidies were cut by as much as 75 percent, according to the China Association of Automobile Manufacturers. They’re expected to fall for two or three more years.
On Dec. 30, Nio reported an unaudited third-quarter loss of $352.8 million and warned that its continuous operation depends on its “capability to obtain sufficient external equity or debt financing.”
The company said it is working on ”several financing projects,” but warned they were “subject to certain uncertainties.”
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Nio shares are down 5.2 percent year-to-date.